On average, business rates across the UK are increasing by 27%
While many see business rates as set in stone like many taxes, a business rates valuation is often based on an inaccurate overestimate. Business rates are subject to an audit process that, if successful, could release six years' worth of overpayments to businesses in the form of a rebate. If appealed before the 1st of April, 2023.
Here’s why business owners should challenge their business rates now and how to do so effectively. Whether you are a small business owner or part of a conglomerate, we’ll provide valuable insights and information on how to navigate the business rates system and reduce your financial overheads.
Why challenge your business rates?
Essentially, business rates are a form of property tax that businesses must pay on their commercial properties. These rates are set by local governments and are loosely based on the open market rent of the property.
Business rates have also long been a contentious issue for many business owners across the UK.
The burden of paying business rates can be overwhelming, especially during difficult economic times. As we enter a new rating period, many businesses face an increased bill from April. There have been growing calls among business owners to challenge these rates, arguing that they are too high and that they place an unfair burden on businesses during a cost-of-doing-business crisis.
One of the main problems with business rates is that they are often based on outdated property values. This means that businesses may be paying rates on a property that is worth significantly less than the value on which the rates are based. In addition, many business owners feel that the process of challenging business rates is too complex and time-consuming, making it difficult for them to navigate.
However, it is important to note that challenging business rates is not only possible, but it can also be relatively simple. With the right guidance and support, you can successfully challenge your rates and potentially achieve a reduction.
Want to appeal your rates but don’t know where to start?
There’s no one-shoe-fits-all approach to a business rates challenge due to the many different appeals you can make. It’s best to first get accustomed to which circumstances for an appeal your business may be successful in before you begin to build your case. Here are some examples:
Check-Challenge-Appeal(CCA): The CCA process may be the most common audit that businesses are aware of. This is dealt with by the valuation office when the rateable value of the property is in question. It’s split into three stages
• The ‘Check’ stage: Through which the ratepayer and the VOA agree (and if
necessary correct) the key factual information about the property in question
• The ‘Challenge’ stage: Through which a ratepayer may make a challenge to the
VOA’s valuation, and submit and discuss any relevant evidence
• The ‘Appeal’ Stage: The ability for the ratepayer to appeal to the Valuation Tribunal
for England (VTE), if no agreement has been reached with the VOA
Merging/splitting a business property.
Contiguous assessments can be merged to reduce the Rateable Value, as the rate per square meter often decreases with larger assessments.
When the occupiers offer different services and are different companies, splitting assessments can be an effective way of obtaining small business rates relief, meaning a 100% discount.
Parking spaces can be merged with properties based on their location, thus reducing rates liability, regardless of whether you receive small business rates relief or not.
Material Change in Circumstance appeal (MCC)
Businesses can appeal the VOA's assessment of their property's rateable value outside the revaluation cycle by submitting a Material Change of Circumstances (MCC) appeal. Such a request is usually based on a change in the physical characteristics of the property or its location. A typical example of a change that would be considered an MCC would be the demolition of a part of a property.
Familarise yourself with as many different types of appeals as possible, as your business may be eligible to appeal on multiple grounds. On average, we identify three appeal types per client as a result of our service. You can also apply for multiple appeals simultaneously, to maximise your savings.
Submitting your appeal.
Business can appeal their business rates by submitting a formal appeal to their local council. This may require the submission of supporting documentation such as financial records or evidence of changes to the property. The appropriate agency will then review the appeal and make a decision based on the information provided. It is also possible to appeal to the Valuation Tribunal if the agency or the owner is still not satisfied with the outcome.
Businesses may also choose to use a business rates agent to appeal their business rates, here’s why:
Expertise: Business rates agents have specialised knowledge and experience in the sector, which can be beneficial in ensuring that an appeal is made correctly and that all relevant information is presented to the council.
Time-saving: The process of appealing business rates can be time-consuming and complex. Business rates agents can manage the entire appeal process on behalf of the business, freeing up time for the business owner to focus on other matters.
Increase chances of success: Business rates agents have experience in dealing with local authorities and the Valuation Tribunal, which can help increase the chances of a successful appeal.
Negotiations and settlements: Business rates agents can also negotiate settlements or reductions of the business rates with the local council on behalf of the business.
Commercial Property Advisors work on a contingency basis, which means we only invoice for a percentage of the savings if your appeal is successful. This can often be more cost-effective than spending the time doing it yourself, or paying for legal representation.
If you’d like free advice on your appeal progress, or you want to find out more about business rates, please get in touch!