5 minute read
Check, Challenge and Appeal
A new system for Challenging business rates bills was introduced on the 1st April 2017. ‘Check, Challenge and Appeal’ significantly changed the way business rates appeals were handled in England under a three-stage process:
In England, as of 31st March 2021, under the first 4 years of the 2017 Local Rating Lists, the Valuation Office Agency (VOA):
Advertisement
• Received 568,340 Checks under the Check, Challenge, Appeal (CCA) regulations.
• 127,750 of these, around 22% of all Checks since the start of the 2017 Lists, were registered in the first quarter of 2021 (to 31st March 2021), during the third national lockdown.
• 303,260 non-domestic properties such as offices, factories, shops, pubs and restaurants lodged a Check to their Rateable Value during the 2020 calendar year, up 321% on the 71,990 Checks during the corresponding period in 2019.
The first stage. Ratepayers (or their representatives) check the information that the Valuation Office Agency (VOA) hold about their property.
The ‘proposal’ stage. A proposal must be made within 4 months of the date the check was completed. If the VOA does not agree with the proposal and the ratepayer does not withdraw it, the VOA will serve a notice of decision setting out why they are not making the alteration or are making a different alteration from the one proposed.
The final stage where, if the ratepayer is not happy with the VOA notice of decision, an appeal can be made to the independent tribunal. This must be done within 4 months of the date of the VOA decision notice.
April 2017 to March 2021
Checks Case Status
Received Resolved
Month
Source: Valuation Office Agency
The huge spike in volume reflected the restrictive measures introduced to counter the pandemic. The restrictions put in place hit occupiers of commercial property hard and significantly reduced the rental worth of many properties.
The largest spike in Check volume occurred at the onset of the pandemic, coinciding with the first set of national lockdown restrictions.
August 2020 saw the highest number of Challenges received in a single month by the VOA as a direct consequence of the rise in Checks.
A total of 101,260 Challenges have been registered under the Check, Challenge, Appeal (CCA) regulations.
April 2017 to March 2021
Challenges Case Status
Received Resolved
‘Material Change in Circumstances’ appeals allow ratepayers to seek substantial adjustments to their Rateable Value to reduce their business rates.
At the 2021 Spring Budget, The Office for Budget Responsibility forecasted revenue from business rates would be hit by around £3 billion during the 2021/22 financial year due to pandemic related Appeals. In contrast, the Rating Surveyors Association estimated that cost to be far higher; in the region of £5 billion.
On 25th March 2021, the Government announced legislation to stop and disregard business rates appeals in England citing COVID-19 as an MCC, instead choosing to work with Local Authorities to distribute a new £1.5 billion fund to sectors specifically excluded from the retail, hospitality and leisure rates relief schemes worth £11.06 billion during 2020/21 and £6.1 billion during 2021/22.
In England, a Statutory Instrument came into force immediately clarifying that COVID-19 and the Government’s response were no longer considered relevant in terms of MCC appeals. Primary legislation to bring into effect Government policy retrospectively has been laid before Parliament.
The VOA will take no further action on outstanding COVID-19 related MCC cases, given the introduction of the retrospective primary legislation.
The changes seek solely to protect Local Authorities from uncertainty regarding their financial position through losses on appeal under business rates retention. In addition, the legislation will potentially save Local and Central Government circa £3.5 billion during 2021/22; to the detriment of ratepayers.
The process for challenging the Rating List differ between England and Wales. In Wales a Challenge, known as a Proposal, is made to the Valuation Officer asking them to change the entry in the Rating List.
After a period of discussion, if the Valuation Officer cannot reach agreement with the ratepayer, the matter is referred to the Valuation Tribunal Service, at which stage it becomes an Appeal.
In Wales, as of 31 March 2021, the VOA had:
• Received 34,490 Challenges.
Summary of Overall Checks and Challenges in England
April 2017 to March 2021
Checks
Challenges
Registered
568,340
101,260
Outcomes
Resolved
544,050
29,340
Incomplete Outstanding
.. 24,290
5,540 66,370
Source: Valuation Office Agency
On 1st July 2021 large retail, leisure and hospitality businesses in England were effectively returned to full business rates liabilities, calculated by reference to rents being paid 6 years ago bearing no resemblance to the here and now, with the fundamental right of appeal to seek valuation adjustments being retrospectively removed. “ “
Simon Cronk BSc FRICS Director, Altus Group
Challenges
April 2017 to March 2021
Case Status
Received Resolved
Quarter
Source: Valuation Office Agency
The number of Challenges received against the Welsh 2017 Rating List increased in the quarter ending 31st March 2021 to their highest ever level. The spikes in volume can be attributed to citing the pandemic as a Material Change in Circumstances.
Elections to the Senedd took place on 6th May 2021 with the pre-election period, previously known as ‘purdah’, commencing on 25th March 2021, the same day England introduced the statutory instrument.
Whilst the devolved administration in Wales will receive an additional £90 million under the Barnett consequential flowing from the political decision to legislate retrospectively in England, Welsh Ministers were precluded from making any announcements or taking decisions which are or could be construed as conferring party-political or electoral advantage.
The Welsh Government subsequently announced in July 2021 their intent to also legislate by seeking to include provisions for Wales in the UK Government’s Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, which will operate to disregard Covid-19 appeals on the basis of a Material Change in Circumstances.
