If you own commercial property in London, chances are you’ve experienced the impact of business rates on your bottom line. Business rates, also known as non-domestic rates, are taxes paid on commercial properties. The amount payable is determined by the rateable value of your property, a figure set by the Valuation Office Agency (VOA).
However, if you feel that the rateable value of your property has been overestimated, it’s critical to know that you can challenge this assessment. This article aims to help you understand the process and provides key insights on how to effectively lodge a challenge against your business rates valuation.
Understanding Business Rates Valuation
Before embarking on the challenge process, it’s important to understand how business rates are calculated. The VOA, an executive agency of HM Revenue and Customs, is responsible for providing the rateable values of all commercial properties in England and Wales.
The VOA’s assessments are based on the likely annual rent of the property if it were available to let on the open market at a fixed valuation date. As a property owner, you should be aware that changes in your local area can affect this rent and hence your rateable value. For instance, improvements to local infrastructure or an increased demand for properties in your locality can increase your property’s market rent and subsequently, its rateable value.
It’s important to note that rateable values are reviewed every five years during a process known as revaluation. However, changes in the property market or your local area can trigger a reassessment of your property’s rateable value before the next revaluation.
The Challenge Process
If you believe the VOA has got your rateable value wrong, you are entitled to challenge it. The challenge process, better known as ‘Check, Challenge, Appeal’, has three distinct stages:
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Check: You review the facts about your property held by the VOA. If the details are incorrect, they can be updated. Any changes can affect your rateable value.
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Challenge: If you’re not satisfied after the Check stage, you can formally challenge your valuation. This involves providing evidence to support your claim, such as rental information or the rates of similar properties.
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Appeal: If your challenge is unsuccessful, you can appeal to an independent valuation tribunal.
Preparing for Your Challenge
Successfully challenging your business rates assessment requires careful preparation. First, gather as much information as possible about your property and the rates of similar properties in your area. This may involve researching local property markets, enlisting the support of a professional surveyor, or engaging with other businesses in your area.
When presenting evidence, be clear and concise. State your case firmly, but without confrontation. Ensure that your argument is backed by robust evidence, and be prepared to answer any queries the VOA may have. Stick to the facts and avoid emotive language.
Seeking Professional Advice
While it’s possible to handle a business rates challenge on your own, many property owners opt to engage a professional to navigate the process on their behalf. Professionals, such as ratings surveyors, have a deep understanding of the VOA’s processes and can provide valuable advice on the likely success of your challenge.
Choosing to work with a ratings surveyor or another professional can save time and stress, particularly if your challenge progresses to the appeal stage. However, it’s crucial to work with a reputable provider who operates on a ‘no win, no fee’ basis to avoid unnecessary costs.
Impact of Recent Changes
Recent changes to business rates relief in London have heightened the importance of ensuring your property is accurately assessed. In April 2021, the government introduced a 100% business rates relief for businesses in the retail, hospitality, and leisure sectors, for the first three months of the 2021/22 financial year. From July 2021, these businesses could still claim a 66% relief for the rest of the year, capped at £2 million.
These changes highlight the importance of ensuring your property’s rateable value is accurate. If you’re eligible for relief but your rateable value is overestimated, you could be missing out on vital support. Consequently, if there’s any doubt about your business rates assessment, it’s well worth pursuing a challenge.
Professional Assistance & Representation
Seeking professional assistance can be a significant factor in successfully challenging your business rates valuation. Ratings surveyors and other professionals who specialise in this area can provide crucial advice and represent your interests efficiently.
Surveyors can carry out an in-depth assessment of your property and compare it with similar properties within your locality. They can scrutinise the rating list, identify discrepancies, and provide relevant evidence to support your case. Additionally, professionals have extensive knowledge about the Valuation Office Agency (VOA) and its valuation process, which can be advantageous.
However, choosing the right professional is crucial. Opt for professionals who work on a ‘no win, no fee’ basis to avoid incurring unnecessary expenses. Look for credible ratings surveyors with a proven track record in handling business rates challenges. Don’t hesitate to ask for references or seek recommendations from others in your sector.
The process of challenging a business rates valuation can be complex and time-consuming. Professional representation can help to streamline this process and potentially improve the outcome of your case. They can deal with all stages of the ‘Check, Challenge, Appeal’ process, minimising the effort required from you and increasing the chance of a successful outcome.
Closing Remarks: Staying Proactive
Business rates can significantly impact your profitability as a commercial property owner in London. Therefore, it’s crucial that you remain proactive in questioning your rateable values if you believe they’ve been overestimated.
Understanding the process of challenging a business rates valuation is key. The ‘Check, Challenge, Appeal’ process may seem daunting but with detailed preparation, clear and concise presentation of evidence, and possibly professional assistance, successful outcomes can be achieved.
Remember, the business rates landscape in London is continuously changing. As the owner of a small business, real estate or even a large corporation, you must remain vigilant. Changes in the property market, local area, or tax relief regulations can all trigger a reassessment of your property’s rateable value.
In conclusion, don’t accept your business rates liability at face value. If you believe your property’s rateable value doesn’t reflect its true potential rental income, challenge it. After all, it could lead to significant savings and boost your bottom line.
