The Department for Communities and Local Government has finally
published its response to the Consultation on reform of the
business rates appeal system. Despite the significant response to
the Consultation and the concerns raised in respect of the
proposals, the proposed reforms are to be implemented on 1 April
2017, at the same time as the new list comes into effect.
The area of most concern was the proposal providing that the
Valuation Tribunal had to determine whether or not a property's
RV was 'outside the bounds of reasonable professional
judgment'. The reason for this was that it could lead to
businesses paying an unfair amount of tax where the Valuation
Tribunal considers the RV is too high, but as it is within a
spectrum of reasonable professional opinion, it is prevented from
lowering the RV by ordering the list to be revised to reflect an
accurate RV for the property.
In response to the criticism of this proposal, DCLG is
determined to press ahead with a system that maintains the current
RV if it is considered reasonable. DCLG maintain that this approach
will weed out speculative appeals. However, that is of no comfort
to a large or complex business where the figures are high and the
valuation range uncertain. Fundamentally, the proposals allow for a
RV to be maintained that is in excess of what the actual RV should
be. This is a sea change from the current system.
DCLG is dropping the 'outside the bounds of reasonable
professional opinion' proposal and replacing it with a
requirement on the Valuation Tribunal to determine if the
extant valuation is a reasonable valuation. The government will not
set an arbitrary fixed percentage boundary on what constitutes a
reasonable valuation. Therefore, it will simply be for the Tribunal
to determine whether or not the extant RV is reasonable. This
retains the basic concept of the reform proposed – namely a
system based whether the RV the subject of appeal is reasonable as
opposed to accurate.
The new regime will be upon us soon and businesses will have to
adapt to a different way of dealing with appeals.
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