In the Media

Non-Domestic Rating Bill: breaking down the changes, part one

The big story in rating at the moment is the Non-Domestic Rating Bill that’s making its way through parliament.

Consultation on improving business rates has been going on forever and the new Bill crystallises all of this into some significant changes designed to support more regular revaluations.

One of the past criticisms has been that rateable values were out of sync with rental values – the rateable value is meant to be a hypothetical value, but when you have rating lists that have run for seven years for the 2010 list and 6 years for the 2017 list, it’s easy to see how the market moves on and RVs don’t.

The 2023 list has corrected all this but the Bill includes some massive changes that go way beyond supporting more frequent revaluations.

The ability to deliver more frequent revaluations from 2026 is dependent on the Valuation Office getting more data. Everything is about data these days isn’t it. The VOA now wants more data on the properties we occupy and the rents we pay. At the moment the VOA has statutory powers to obtain rental info using rent return forms and then use the same property data websites that the rest of us surveyors use to hunt for information.

That’s all going to change. Ratepayers will soon have to notify the VOA of occupier or physical property changes and to provide rent, lease and, where appropriate, trade and other information used for valuation purposes. This will be submitted via a new online portal together with an annual confirmation statement within 60 days of the start of the financial year. On the plus side, there will be a 100% rate relief for eligible improvements, including the generation of renewable energy.

One saving grace is that the government is keen to avoid the farce from other prematurely released IT systems and as such the annual confirmation will only be mandatory when they are satisfied it actually works. At that point there will be some hefty penalties for non-compliance or deliberately providing misleading or incorrect information. Rightly so.

But by far the most significant change however is to the 2026 onwards rates ‘appeal’ process.

Since 2017 we have had Check Challenge Appeal – a multi-stage sequential process that first involves a Check to confirm or correct the facts, before moving onto the meaty valuation arguments at Challenge, followed by an Appeal if you still can’t agree. From 2026 there will be no check stage – the requirement to report changes and the annual confirmations statement will do away with this.

The big difference is the imposition of restrictive timescales. Since the start of the modern rating system in 1990, appeal action could be started at any point during the rating list. To put that in perspective, for the last rating list we had seven years to start the process and for the 2023 list there will be three years. From 2026 there will be only 6 months. Gulp. It’s sobering to think that the valuation date for the next rating list is less than a year away.

The requirement to provide info will also encompass the need to link each property a business occupies to HMRC within 60 days of occupation or introduction.

What happens with group companies or multiple businesses on the same shared site? Digitalising Business Rates, or DBR, has backed away from a centralized system to display business rates information alongside tax information and will instead focus on just making it easier for businesses to identify the relevant reference number and submit it to HMRC through the same portal that will be used to capture property changes.

DBR will allow greater sharing of information between councils with the aim of reducing the amount of fraud and evasion but also to allow the more targeted application of relief – exactly how remains unclear.

The Government have missed an opportunity to vastly improve the management of rates bills by creating a single integrated billing system – anyone who gets bills from more than one council area will understand the lack of consistency in presentation and calculations that are incomprehensible to many ratepayers.

The next part of this series will look at the Bill’s rules around local authorities’ awarding of discretionary relief.

Non-Domestic Rating Bill: breaking down the changes, part one

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