Charged on most non-domestic or commercial properties, business rates are taxes that help to pay for local services. The rates are charged by your local council and the amount your business has to pay is based on the property’s rateable value. This is set by the government’s Valuation Office Agency (VOA), which manages the periodic Ratings List that all business rates are based on.
The rateable value of your property, and therefore the amount you have to pay in business rates, is based on a complicated calculation that relates to the property’s rental value, the uses that property is put to and any circumstances around the property that might have an impact on trade. In order to stay in step with changes in the property market, the VOA re-evaluates the rating list at five-yearly intervals. The most recent last revaluation in England and Wales was on 1st April 2017.
Offices, shops, factories, warehouses, pubs, hotels and even some people who work from home all have to pay business rates each year, and they can represent a significant amount of outgoings. The good news is that it may be the case that you are paying too much, particularly if there have been changes in either the way you use the property or in the area around the property that could be affecting trade.
How you can appeal to reduce your rates
If you think that you may be paying too much in business rates, you can query your property’s rateable value directly by contacting the VOA. In many cases they are able to respond quickly, and you could see a reduction in your business rates agreed within two months. In some cases it takes longer than this, and if you and the VOA are unable to agree, it can go to valuation tribunal. Even in straightforward cases, the onus is on the appellant to prove that the rateable value is too high.
You can submit an appeal to the VOA for the following reasons:
- You believe initial rateable value in the last rating list (April 2017) was/is inaccurate
- The space has been re-configured
- The way the space is used has changed
- There has been major roadworks or another significant event which has impacted on the business
- A new development such as a shopping centre has drastically altered the balance of competition in the area
- There has been an increase in vacant commercial buildings in the area, causing a negative impact on trade
- Your property has experienced fire damage or flooding or other similar calamity.
Most of these are considered to be material changes, and once the VOA is aware of them it will look at how they affect the rental value of the property and decide whether or not this means that the rateable value should be reduced.
If the VOA believes that the rateable value is correct, and you disagree, you can appeal their decision at a valuation tribunal. This is a 45-minute hearing in which you must prove that your business rates are too high because the rateable value on your property as set by the VOA is inappropriate. You can expect to hear of the decision within a month of the tribunal.