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Business Rates and How SME's Can Appeal

Small businesses worried by a proposed hike in business rate rises should be prepared to challenge their valuation, says Louise Hebborn, Head of Commercial Litigation at the national law firm Stephensons.

Proposed changes to the way that business rate challenges will be dealt with have generated a great deal of concern among small businesses with some even suggesting that the changes may be unlawful. 

New rates will be set by the Valuation Office Agency in the coming weeks and are expected to rise unusually sharply in some areas.

The government is also changing the mechanism by which businesses appeal against its valuations, including a proposed “reasonable professional judgement” provision in its draft regulations.

This would mean that ratepayers would not be allowed to appeal an incorrect business rates valuation if it were inside a “reasonable margin” of error.

This proposed ‘reasonable margin of error’ amendment – while certainly contentious among business leaders – cannot necessarily be dismissed as ‘illegal’ and until the regulations have been passed it is difficult to understand the full extent of the proposed changes.  At this stage, it is simply too early to say.

Even if this amendment stands, it should not dissuade businesses from challenging their valuation. With such large-scale changes looming, business owners would should be sure to check any valuation carefully and ensure they are not paying more than they should.

Presently an appeal can be lodged in a personal capacity, or through a chartered surveyor, in writing to the Government’s Valuation Office Agency (VOA).

Any prospect of success will depend upon one of four ‘grounds to appeal’. Firstly, it can be suggested that the valuation was incorrect. Secondly, that the property has been changed and that this should be reflected in the rateable value. Third, that an alteration made to the valuation is wrong. And fourth, that the property has been incorrectly split into more than one listing, or combined with other properties to form a single listing.

In most cases, appeals will be settled without the need for any legal proceedings. However, on occasion, it will be necessary to take the matter to a valuation tribunal. At this stage, seeking good quality legal advice is a must. A solicitor specialising in commercial litigation will be able to discuss and prepare your case, giving you the best possible chance of success.

However, even if the decision doesn’t go your way – or if the outcome of the tribunal is disputed by either party – the matter can be escalated to the upper tribunal (lands chamber).

Once the legislation change is brought in it is likely that a 3 stage process will replace the current process, to allow the check of the information leading to the valuation, a challenge (i.e. on the basis that it is wrong), which will lead to a decision by the local authority.  That decision can then be appealed against.  It is likely that the areas of appeal will be limited

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