Our Thoughts

Chancellor’s business rates giveaway continues…

The Chancellor pledges three-yearly revaluations from 2021

In a somewhat short Spring Statement the Chancellor continued with the government’s on-going reform of the business rates system with an unexpected surprise. The next scheduled revaluation has been brought forward by one year, from 1 April 2022 to 1 April 2021, when three-yearly revaluations will come into effect.

BNP Paribas Real Estate has long championed three-yearly revaluations. We view today’s announcement – which brings forward this pledge – as most welcome indeed.  When the Chancellor pledged three-yearly revaluations in his November budget speech, we thought that the current 2017 rating list would continue for the scheduled five years.

The valuation date for the 2017 rating list is 1 April 2015 and the valuation date for the 2021 rating list will be 1 April 2019, just one year away.  With limited movement in rental levels in many locations between these dates and values continuing to rise in some locations, today’s news should prevent big swings in rateable value and corresponding rates bills come 1 April 2021.

Our concern now is whether or not the Valuation Office Agency is adequately resourced to deal with another revaluation. Like many government agencies they have been subject to cuts in staffing, with many experienced valuers leaving the agency. Moreover, there is still a backlog of 2010 rating list appeals that looks set to get worse, with imminent changes to reopen the list in order to deal with another budget pledge – restoring some businesses’ liabilities where they are affected by the ‘Mazars’ judgement.

These concerns should not however distract from today’s announcement, which we believe is generally good news for businesses. We now predict that the next significant announcement will be a self-assessment based regime.

 

 

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As long as Ministers swallow what officials tell them about the blinding success of CCA, I am not sure that we will make any progress, here. Contrary to what Ministers in both Houses tell us, the CCA software simply does not work; and the whole system is furthered by the deliberate concealment of previously-available transactional information in relation to comparables.

Further, it also seems to me that a 2 year AVD makes less sense with a 4 year revaluation and unacceptable when we move to 3 years. More frequent revaluations are supposed to reflect more current rental values. And those values may, perhaps, be falling as a result of Brexit, leaving us again with an AVD at pre market-crash levels.

The other issue not mentioned is that by moving the revaluation forward the transition scheme has one less year to work through. In particular large hereditaments may have benefitted from very little of their gains. Also those ratepayers who lost SBRR or Rural Rate Relief may only be paying £2,400 in 20/21. Whatever transition and other reliefs we may have from April 2021, many will be based on adjusted bills. When the appeals come through, the amounts will change again. Neither ratepayers nor local authorities will know how to budget.

J P Scrafton

Posted on 14.03.2018