The rating game
As an occupier of business premises, you should by now have received a notice of assessment giving you a guide to what you are likely to have to pay in business rates during the next few years. If it has not arrived, you can get the figure from the Inland Revenue Valuation Office.
Forecasts indicate that for most business people a revision in the rate will be a shock, while for the lucky few it will be a relief. But shock or relief, it is worth spending time checking the figure to be sure that you are paying no more than your fair share.
To do this effectively, put yourself in the boots of the valuation officer. In deciding the rateable value of your premises, known as the "building block" for your rates bill, you will have to establish what the property would command by way of annual rent if let:
with vacant possession;
for existing use;
in a free and open market;
on 1 April 1993.
Your main concern here is the annual rental value and nothing else. The saleable value is of interest, but only because it might be a guide to how much rent it would fetch.
Vacant possession is also important. It could be that you are lucky enough to own the place you work in or, for various reasons, you pay just a peppercorn rent. This makes no difference. When assessing your property you will need to decide how much it could have been let for on 1 April 1993 without you in it!
Existing use must also be considered. All shops are valued for rating purposes assuming conventional trading use - for example, butcher, launderette, fashion outlet or hairdresser - even though the lease may restrict it to only one category of business.
On the other hand, when considering premises occupied by businesses requiring special planning permission or a licence, such as estate agencies and wine bars, possible enhanced rental value has to be taken into account.
You are not finished yet for, like the valuer, you will also have had to take note of the current state of repair of the property. A recently modernised shop or studio facing a pleasant green is clearly likely to fetch more in rent than a less salubrious outfit under the railway arches.
In working out your figures, you will have to make a number of assumptions. One is that you, as occupier, are responsible for repairs, insurance and other expenses as well as the payment of rates. Even if you are not responsible for these things it makes no difference: the valuation will be based on the premise that you are.
Apart from looking at your own property, you will have to find out what you can about the rents of similar and adjoining properties. The valuation officer bases his assessment of the rental value on returns completed by all occupiers in his area and looks at rents achieved per square metre and, wherever he can, in particular at rents that have been settled close to the common date - 1 April 1993.
All these considerations will be difficult to take into account, but it might be even harder to relate all this to one specific day. To do the job properly, you, like the valuer, will be thinking in every case: "What would this place have fetched in rent on 1 April 1993?"
Although you are making your assessment well after that date, anything that happened after it cannot be taken into account because, theoretically, you would not have known about it. It is imperative to forget any subsequent fires, floods, street-closures, the arrival of a couple of new supermarkets and various local and national economic downturns or upturns. You must concentrate on the situation as it would have been had you been doing the valuation on 1 April 1993.
If, when you get your bill, you feel that justice has been done and that you are not being penalised in favour of a business around the corner, you may decide to climb out of the valuer's boots and leave well alone.
Your bill, despatched to you by the local council to arrive on or about 2 April, will be approximately as forecast by the Valuation Office and will be payable in 10 instalments.
If you are not satisfied, then it is time for action. If you can see that there is some arithmetical or similar error, write at once to the Valuation Office. The error will be corrected and your bill will be adjusted. If, however, you feel you have good reason to dispute the assessment then you can do so on your own or take professional advice.
At this stage, you need to watch out for rating "sharks" who will aim to bamboozle you with meaningless charts and rows of figures. These so-called consultants are keener to get hold of your advance payments than look after your interests. Usually they have poor reputations but a persuasive line of patter.
Show them the door, firmly. If you need skilled help and feel it is worth paying for, ask your local chamber of commerce or similar organisation for a list of names. Experience has shown that you will run fewer risks if you consider advisers with the letters IRRV, FSVA and/or RICS, FRICS and ARICS after their names.
To save money, you could go it alone at first by arranging for a preliminary discussion with someone from the Valuation Office. He, or she, could put you right on some points and iron out some misconceptions. The experts agree that it is often in your interest to settle a case out of court, even if you do not obtain full satisfaction.
Should you still feel aggrieved, then that might be the time to bring in a professional. He, or she, will spell out the costs and benefits of going to appeal. In this context, there is no legal aid available either in relation to seeking advice on initial assessments or in going to a Valuation Tribunal.
As with other legal proceedings, while there is a chance you may be able to secure your costs at a later stage, where points of law are in dispute, it is most unwise to proceed on that assumption.
Recommended reading:
Business Rates: Your Guide, by Colin Farrington and Tom Dixon, price £5.99, from the Institute of Revenues, Rating and Valuation, 41 Doughty Street, London WClN 2LF.
