New business rates revaluation in effect soon

Jan 26 2010 By Neville Farmer, The Journal

IN the last few weeks every ratepayer should have received details of the basis on which their property has been assessed.

In the case of most retail properties, this will have been calculated on a number of sq metres occupied and the rental values in the particular location. For most licensed and leisure properties however, the basis differs in that rental values (and therefore rateable values) are assessed by reference to fair maintainable volume of trade capable of being carried out as at April 1, 2008.

To arrive at a rateable value, the Valuation Officer (VO) of the Inland Revenue will have ascertained the trade by asking for details for the three years leading up to 2008. In the absence of trade information the VO may have had to resort to estimates. Obviously depending on these estimates there may be advantage or disadvantage to an individual ratepayer. In any event, these trade details are historic and physical circumstances may have changed in the last few years – leading to some rateable values being excessive.

To cope with this dilemma, it’s important to get your house in order. The regulations say that the physical position of the property is that pertaining at the date of the new Rating List (ie April 1, 2010).

It is therefore very important that if physical circumstances have changed in the last few years such as new competition, roads altered or working place closures – leading to a reduction in trade – that steps should be taken to make sure that the VO’s assessment is amended.

Of course, any such effects will also have a bearing on current liabilities and an appeal against the existing Rating List before April 1, 2010 may be beneficial.

For the new Rating List transitional arrangements will continue to apply - that is, any large increases in rates payable may be limited with an inflationary increase based on the current liability.

In view of the above, it is clear that it is important that any excessive amounts of rates payable is minimised for both the existing and new Lists. Additionally, the interpretation of "fair maintainable trade" is open to some educated opinion as is the way in which any given level of trade has been treated to arrive at a rateable value.

It is recommended that current rateable values be looked at before the end of the existing Rating List as backdated reductions may be warranted which may, in turn, reduce future liabilities.

Neville Farmer is a former long-term Inland Revenue valuation officer and specialises in licensed property. For informal advice and to discuss a no-gain, no-fee basis, call Neville on 0191 261 2681.