In this second instalment of a series on the significant business rates changes that are making their way through parliament, I look at discretionary relief and other new rules that are part of the Non-Domestic Rating Bill.
The Bill also introduces new rules on a variety of additional points identified through consultation including relief on improvements made to a building, for 12 months until 2029 but with further consultation in 2028 to see whether this should be extended.
A very welcome addition is an amendment to when local authorities can award discretionary relief. At present any relief must be applied within 6 months of the end of the relevant rate year. I’ve had two instances recently where the property would have absolutely received retail discount had it not been for the Valuation Office Agency’s failure to assess the properties until several years later – we’ve had to then jump through hoops to resolve the situation.
There are additional legislative changes to allow the VOA to share information upon which the rating valuation is based which will help determine whether action to reduce the RV is appropriate but exactly when this will be divulged and how it will be accessed is unclear. We do know that it will be via a digital platform but will this be readily available or only when a Challenge has been submitted?
The Bill will allow the government to link annual increases to the business rates multiplier to Consumer Prices Index (CPI) rather than the Retail Prices Index.
Following on from the Covid-related Material Change of Circumstances farce the Bill will stop legislation ever being accepted as a MCC and therefore removing the possibility of it resulting in midlist changes to RVs.
Business rates is a fully devolved power but unusually a number of provisions apply to Wales as well as England at the request of the Welsh Government, most relevant – relief on new improvements & heat networks, disclosure of information to ratepayers and Digitalisation of Business Rates.
So, all told, there are a lot of changes that are all centered around making the system more robust and the tax base more stable, minimizing the potential for leakage, fraud and it would seem appeals. The biggest problem faced with getting rateable values right first time is currently finding relevant and accurate supporting comparable evidence.
The new statutory requirement to submit information goes some way to change this but doesn’t provide a guaranteed of accuracy because ratepayers will still need to be able to interpret the facts to provide the right answers. The government’s answer to this is that ratepayers should take reasonable steps to find out what their obligations are by reading the VOA’s guidance.
Can the guidance really cover deconstructing complex lease terms, identifying rent free periods, who is responsible for alterations undertaken at the start of a lease or recalculating Zone A measurements post alterations? Some rating valuations consist of line after line – how does the average occupier know if every line is correct or whether every historic alteration has been reflected? It’s a case of Rubbish-In, Rubbish-Out but exacerbated by submitted information being treated as gospel by the VOA and then fed into the Automated Valuation Models that will be essential for the even more frequent annual valuations that have been suggested from 2026 onwards.
A lot of these changes are long overdue but I do have serious concerns about the majority of organisations ability to accurately capture the information for onward transmission to the VOA in a way that complies with the timescales and level of detail required. The VOA needs to invest in a robust information platform that allows effective interaction with occupiers and their agents to get this right but any way you look at it, this is a burden that some will find extremely difficult to comply with because the answers are just unknown.