So far but yet so near

Michael Yass Associate, Fleurets London

This article is unintentionally well timed; not to alert you to the new rates year about to start on 1st April, but the Antecedent (statutory) Valuation Date (AVD) on that day. This is the date on which all valuations for the forthcoming 2010 Rating Revaluation will be fixed. This will affect all businesses, but steps can be taken to limit any possible increase in Rateable Value (RV) and business rates liability.

As you are no doubt aware, the RV of most licensed property reflects the trade of the house in question. We have been assured that the Valuation Office Agency (VOA) will be diligent in their information gathering. Managed house operators and tenants alike will receive mauve forms from the VOA seeking trade, rental and other property information in order to provide the necessary details to assess the RV. It is mandatory to return the information. Even though the VOA may have trade information, it is by no means always appropriate to adopt the actual trade to arrive at the rating assessment of a property. The success of any business can be affected by many factors, causing either exceptional trading results or a notable decline.

Every business is individual and unique, for which reason it is important to take time to understand the factors that drive a business and those that will impact upon it. Only when this is done is it possible to provide advice to clients and negotiate any appeal served on the VOA (where appropriate) to challenge the RV of any property, with authority.

Between now and 31st March 2010 it is advisable to review the RV of your property, even if an appeal has already been considered or successfully negotiated during the life of the 2005 Rating List. They say one week is a long time in politics; it is also true that two years is a long time in property and rating advice, especially in the current climate.

The VOA will typically focus on trading information for the three years to 2008 when assessing the 2010 Rateable Values. Much may happen, however, to affect trade before the new Rating List comes into effect. Where trade has been affected by the smoking ban for instance, this may only be evident from the 2009 year end accounts and thus, possibly may not be reflected in the 2010 Rating List.

By receiving timely advice, it may be possible to reduce the 2010 RV before 1st April that year and avoid 'over-paying' business rates liability whilst waiting to resolve any appeal. It may also provide the opportunity to reduce the current, 2005, rating assessment and thus liability, retrospectively.

The RV of property can be challenged on a number of occasions. Not only is it possible to appeal the initial assessment at the beginning of any Rating List, but also as events occur that affect trade and reduce turnover.

Similarly, the VOA is able to increase RV's during the life of a Rating List. On various occasions, however, a rating assessment may be increased following a refurbishment of a property, in the expectation that such work will increase the level of achievable business as a result of the work undertaken.

It is true that businesses have to keep pace with changing styles and remain fresh to continue to attract custom. Depending upon the actual work carried out, however, it may not be legitimate for the VOA to increase the RV. As I stated at the beginning of this article, all is not what it seems when considering appeals of Rateable Values.

Fleurets understands that, regardless of whether your business is your own, or one of many within a larger portfolio, every one must operate as efficiently as possible.

I appreciate that many people do not fully understand the valuation process to arrive at a Rateable Value, or the calculation of Transitional Relief (where applicable) to determine the correct level of business rates liability. One thing that everyone understands and are passionate about; a reduction in RV reduces the amount of rates payable. A reduction in rates payable increases profit and thus, the value of the business in question.

An effective rating advisor will, therefore, be able to help any business remain as profitable as possible, not only by reviewing the current RV in preparation for the 2010 Rating List, but throughout its duration from 1st April 2010.

Further Information On Rating Appeals

To receive further guidance or advice concerning rating appeals, please contact:

Michael Yass, Fleurets London on 020 7280 4700

Jim Yarwood, Fleurets Birmingham on 0121 236 5252