Business ratepayers will have to report any changes, and annually, under new bill…

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The Non-Domestic Rating Bill going through Parliament (House of Lords) will require business ratepayers to report any changes and also report annually to the Valuation Office Agency (VOA).

These changes to the operation of business rates will apply to all organisations responsible for paying business rates and it is thought that the Valuation Office Agency will provide an online reporting system making the process as quick and simple as possible, though this is just another chore that tenants and landlords will be responsible for.

These changes will come as part of a package of reforms to modernise the business rating system, which will include reducing the time between rating revaluations from five years to three. It is thought that the reason for the necessity of ratepayers to update annually, and for any material changes, is to ensure that future revaluations will be easier for the VOA to perform and more accurate.

The move will be more of a burden for larger organisations with multiple properties, keeping track of up-grades and property maintenance. However, all ratepayers failing to report annually, even when there have been no changes, will be subject to a fine.

Business Rates payable for a property are determined by the Valuation Office Agency, a branch of HM Revenue and Customs HMRC). The rateable value is based on an assessment of the annual rent the property would let for if it were available to let on the open market, at the fixed valuation date.

The rates payable are calculated (see How your property is valued for business rates) by applying a multiplier, before any relief is applied. The multiplier is set each financial year by the government.

In 2022 the multiplier for premises over £51,000 rateable value was 51.2p. Until the revaluation 31 March 2023, the rateable values were based on a valuation date of 1 April 2015 and from April 2023, the rateable values will be based on a valuation date of 1 April 2021.

What are Business Rates?

Non-Domestic Rates, or business rates, are collected by local authorities in the same way that domestic Council Tax is collected and they contribute towards the cost of local services.

Under the business rates retention arrangements introduced from 1st April 2013, local authorities keep a proportion of the business rates paid locally. This provides them with a direct financial incentive to work with local businesses to create a favourable local environment for growth since authorities will benefit from growth in business rates revenues.

Unless the property is exempt from business rates, each non-domestic property has a rateable value which is set by the valuation officers at the Valuation Office Agency (VOA), an agency of Her Majesty’s Revenue and Customs. The office draws up and maintain a full list of all rateable values.

The rateable value of your property is shown on the front of your business rates bill, and there is online account access to report changes. This broadly represents the yearly rent the property could have been let for on the open market on a particular date. For the revaluation that came into effect on 1st April 2017, this date was set as 1st April 2015.

The valuation officer may alter the rateable value if circumstances change and hence the requirement in the new bill to complete a return. The ratepayer and others who have an interest in the property such as the landlord / owner can request a change to the value shown on the list if they believe it is wrong.

You can do this through a reformed online Check, Challenge, Appeal (CCA) process introduced in April 2017. The billing (local) authority will only backdate any business rates rebate to the date from which any change to the list is effective.

Ratepayers and owners can find a business rates valuation for a property by using the online Find a Business Rates Valuation service to find the ‘rateable value’ of a property in England or Wales.

This is the amount set by the VOA and used by the local council to work out the business rates bill for the property. Using this service you are also able to check the rateable value of similar properties and see how the rateable value was calculated.

Appeals

If you disagree with any decision the VOA makes about your business rates you can appeal against it. But you can only appeal under certain circumstances:

• you are responsible for business rates on a property
• a decision the VOA made is wrong
• the amount you are asked to pay is wrong, for example, if you think a relief or discount should be applied.
• the date given on a completion notice is wrong
• rateable value appeals are done online, as above of through the Valuation Office Agency on 03000 501501.

If you disagree with the VOA decision after a review, or you do not hear from them within two months, you can appeal to the Valuation Tribunal Service. You will need to fill in a Valuation Tribunal Service appeal form which you can download or complete online.

The Non-Domestic Rates Bill 2023

The Non-Domestic Rating Bill 2022-23 had its First Reading in the House of Commons on 29 March 2023. Second Reading 24 April 2023 and it is currently passing through the House of Lords. The Bill, and its explanatory notes, can be found on the Parliamentary website above.

Following a consultation process the new Bill aims to modernise and make a number of technical changes to the non-domestic rating system, better known as ‘business rates’. The majority of the changes have been the subject of Government commitments from 2021 and 2022. These commitments include:

• The power to introduce ‘improvement relief’ – intended to comprise a twelve-month grace period after a property has been improved, during which any rise in business rate liability consequent to ‘qualifying Improvements’ will not apply;
• Introducing business rate relief for low carbon heat networks;
• Introducing improvement relief and charitable relief for the central rating list;
• Introducing three-yearly business rate revaluations in place of the previous pattern of five-yearly revaluations;
• Removing the legislative requirement for transitional relief schemes to be revenue-neutral;
• Permitting the government to adjust the central rating list by means of a direction instead of requiring secondary legislation;
• Permitting the VOA to disclose analysis of rental information to ratepayers, to enable ratepayers to understand how their rateable value has been calculated;
• Permitting the VOA to disclose valuation information to Northern Ireland rating officials (closing a gap in existing legislative provisions);
• Creating a duty on ratepayers to provide information to the VOA regarding properties in respect of which they are liable for business rates, permitting the VOA to impose financial penalties when a ratepayer provides no information or misleading information, and creating a new criminal offence where false information is provided;
• Providing that property valuations cannot take account of the effects of legislation, advice or guidance between revaluations;
• Adjusting the way in which the small business multiplier and standard multiplier are calculated.

  Most of this Bill applies to England only though some parts will extend to England and Wales. Clause 11 extends also to Northern Ireland. None of the Bill extends to Scotland.

More information about the basic operation of the business rates system can be found in the House of Commons Library briefing paper Business rates.

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