2010 rating appeals
The next revaluation of all commercial property in England, Wales and Scotland will take effect on 1 April 2010 and will be based on market rental valuations at April 2008, which saw huge increases in the years preceding this.
Most clients will see substantial increases in their property taxes, which is a serious cost issue.
• Rate bill implications
• Transition
• Collecting evidence
• Making appeals
Every five years all non-domestic (business) properties are assessed by the Valuation Office Agency (VOA) and given new rateable values, based on rental values, for the purpose of calculation liability for business rates.
Rate Bill Implications
The object of a Business Rates Revaluation is to re-align the tax base with values then current in the property market, so the impact will vary, depending on property type and location. In areas and categories where there has been strong rental growth between 2003 and 2008, rateable values are likely to sour as a result of the Revaluation, with a consequent increase in rate bills.
Transition
For previous Revaluation, the government has introduced transitional adjustments limiting annual increases and decreases. The current regulations have been set with a view to removing transitional adjustments and these have been completely removed in Wales. There have been no announcements as yet on this issue.
Collecting Evidence
The Revaluation process begins with the Valuation Office collecting information on its “rent return” forms. The issue of new forms is expected to continue as the Valuation Office prepares its evidence to defend the new valuations when they take effect in April 2010.
Business rate supplements
A Business Rates Supplement (BRS) of 2p will apply to business properties with a rateable value of more than £50,000. The measure, to be introduced from April 2010, will be limited to an estimated one in five of London’s business premises, and some categories of ratepayer such as charities and sports clubs or property will be entitled to full or partial exemption.
Other such supplements will also be introduced throughout the UK known as a local authority Business Rates Supplement these will be for areas that may see significant re-developments.
The business rates revaluation presents an opportunity to re-examine the rates liability of your company for the next five years. Draft list 2010 rateable values will be published on the 1st October 2009 and a copy will be issued to all occupiers of commercial properties. They will also be made available on the Valuation Office Agency website, but will not be forwarded to retained rating advisors.
Formal appeals challenging these new rateable values cannot be lodged until the 1st April 2010. Although there is no official time constraint on the submittal of appeals, it is heavily advised that advice is sought sooner rather than later. This would allow CVS to identify potential opportunities to maximise savings.