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Business Rates - Will You Be Paying Too Much?
17/03/2010
Myles O’Brien, rating surveyor with Aitchison Raffety explains the options.
Any day now rates bills will be dropping through letterboxes in businesses across Britain.
This demand, although expected at this time every year, is somewhat different this time around as the rates on business premises have been recalculated which will result in a revised rate liability.
The Valuation Office has completed the preparation of valuations based on rental information of commercial property at the antecedent valuation of 1st April 2008, in advance of the 2010/11 Rating Revaluation which becomes live from 1st April 2010. The significance of April 2008 is that commercial rental values were generally reaching their peak at this point, resulting in many stark differences in rateable value from the 2005 rating revaluation which were based on rental values in April 2003.
Most businesses should now have received a ‘draft’ valuation from the Valuation Office explaining how they arrived at the rateable value. All business owners should take time and care to ensure that this information is correct as the data forms the basis of the rating liability. It is usually advisable to seek professional advice from a specialist chartered surveyor who will review the valuation and make the necessary recommendations. This will often be in the form of an appeal against the rateable value with many firms working on a no saving-no fee basis and a fee based on a percentage of the savings in a successful appeal.
In an attempt to soften the blow for ratepayers faced with higher increases in rate liability the government announced transitional arrangements which limit increases in liability but also limit large decreases. Despite these transitional arrangements many ratepayers will be facing increases of up to 12.5 per cent from next month (April).
The government has emphasised that the 2010 rating revaluation will not produce additional revenue, highlighted by the reduction in the Uniform Business Rate (UBR) from 48.5p in 2009/10 to 41.4p in 2010/11, a reduction of 14.6 per cent. Given this reduction in UBR, the correlation with rateable values appears to have widened somewhat given that they have increased by 19 per cent in England. Built into the UBR calculation is the assumption by the government that there will be an anticipated loss in revenue from appeals. Businesses should be keen to have a share of this budgeted allocation.
It is crucial that businesses have a strategy for the mitigation of rates liability. The appeals process can be lengthy and to ensure you are in the appeals queue, early groundwork by your rating advisor is essential.
Aitchison Raffety has a specialist rating division which can be contacted on 01442 220800.
