Paul Milsom from Milsom Hotels has warned operators to check how their business rates are being calculated after successfully challenging a decision that had seen his bill increase by almost 25%.
The Pier in Harwich, Essex, went before a business rates tribunal in December after the valuation office changed the way its business rates were calculated from the hotel model to the licensed premises model in 2010.
At the tribunal, the managing director successfully had the calculation method reverted to that used for hotels in relation to the 2010-17 rating. But Milsom is still waiting to overturn the decision in relation to the property’s 2017 rating.
He was not informed of the change in 2010 and it was only in 2016, when soaring business rates at the next classification saw him carefully analyse what had happened, that he became aware and submitted a late appeal.
The 2010 rating had seen the bill for the 14-bedroom property increase by almost 25% to £100,000 per annum. The successful tribunal saw this reduced to £80,000 and a judge ruled the overpayment will be repaid for the financial years 2015-16 and 2016-17.
But, the success will not see the 2017 rating automatically recalculated and Milsom still needs to go through the appeals process to reduce his current bill, which stands at £160,000.
Milsom believed that The Pier was reclassified because of the success of its seafood restaurant and is advising others to check how their rates are being calculated.
He said: “It was incredibly difficult to see what had happened, they don’t tell you and you have to go and ask for a particularly detailed form. The classification still talks about The Pier as a hotel, but they had moved it to the licensed premises scheme.
“This is a landmark case for small hotels where accommodation income is a low part of the total income of the business. People need to look at the detail.
“I know there are other hotels out there as in the tribunal the valuation office referenced a hotel that has the same problem as an example of why we should accept their valuation.”
Milsom said that if business rates have been calculated using the hotel model there will be a singular multiplier to turnover used, where as licensed premises will be calculated using separate multipliers for accommodation, food and beverage.