Business rates taxation needs an efficient appeals system and greater transparency
There are changes that could be easily implemented within the existing legislation that would ease the burden for taxpayers, says David Shuttleworth
Concerns about increases in business rates from many firms in the hospitality and tourism industry have generated plenty of stark headlines since April's revaluation, with calls for reform or even to scrap them loudly championed.
It is understandable, given the particularly challenging climate for many operators to stay profitable, currently navigating a ‘perfect storm' of business rates increases, the threat posed by Brexit, declining sterling values, the National Living Wage and the apprenticeship levy.
We are acutely aware of these trials and are working in partnership with the British Hospitality Association (BHA) to secure long-term reform for the hospitality and tourism sector and advise members on business rates.
Ufi Ibrahim, the chief executive of the BHA, explains: "Due to the ‘bricks and mortar' nature of hospitality and tourism, our industry is struggling to cope with unsustainable increases in business rates. In the short term, proper transparency at the initial stages of the appeal process is essential, as is proper engagement with ratepayers and their representatives to develop a user-friendly digital platform.
"The BHA believes the appeals process needs to be overhauled and hopes the government will make it a priority to conduct a fundamental review of business rates."
We fully support calls for a fundamental review. However, reform will not happen overnight.
What the business rates regime needs is more transparency and an efficient appeals system. In the hospitality sector, for properties such as hotels and public houses, it is possible to see only the value and not the calculation behind that value. For properties where the valuation is visible, the comparable evidence is not, making it difficult to know if the assessment is reasonable.
If you want more detail, you have to navigate the Valuation Office Agency's (VOA) abysmal new 'check challenge appeal' process.
It is ironic that the new system, while designed to reduce a backlog of appeals, is in reality slowing down the process, also making it hard to launch, and extremely complicated to prosecute, a challenge.
We would like to see a requirement for the VOA to make information, such as comparable rents or estimated trade figures, available to ratepayers to support the published valuation. This need not be made public, but should be available to the particular ratepayer.
Such a simple change would appease many businesses, which would be able to see the logic behind the value, and enable appeals to be settled much more easily and, crucially, far more quickly.
Working with the BHA, we continue to lobby the government on business rates, and would like a commitment from the chancellor for a consultation on potential reform of the system as a minimum.
The present business rates mechanism is not beyond repair, and operators who appeal their bills will eventually reach a resolution, albeit only through persistence.
David Shuttleworth is vice-president at Altus Group