The Enterprise Bill was published in September 2015 and, in our commentary on this Bill, we explained that it paved the way for significant changes to the system of appeals against business rates assessments in England. The first details of these changes have emerged in a consultation paper called “Check, Challenge, Appeal“, published by the Department for Communities and Local Government. The consultation applies only to England, although the devolved administrations in Wales and Scotland may make similar changes of their own, and suggests that any changes will come into effect from 1 April 2017, which is the date of the next rating revaluation.
At present ratepayers who are unhappy with their business rates assessment may make a “proposal” to alter their assessment. Such a proposal need only include very limited details of what change the ratepayer proposes and is sent to the Valuation Office Agency (VOA), the government agency responsible for rating assessments. If the ratepayer and the VOA cannot reach agreement the matter is referred to the Valuation Tribunal for England (VTE) for determination. The consultation paper sets out proposals for an entirely new system based on the three stages of check, challenge and appeal.
The “check” stage will require the ratepayer to validate the facts on which the rating list entry is based and to provide any missing information. Until this stage is completed a ratepayer will not be able to make any formal challenge to their assessment. The facts found at this stage will be binding on the ratepayer throughout the remaining stages of the process. So what may appear to be a simple “box ticking” exercise could have a significant effect on a ratepayer’s later position. There will also be penalties of up to £500 for providing false information which will further increase the significance of this part of the process. Once the check stage is complete, the VOA will notify the ratepayer that facts are agreed and of any consequential change to the assessment. When that is done, or in any event after 12 months, the ratepayer may make a formal “challenge” against the assessment.
The “challenge” can be made only within four months of completion of the check stage and will require the ratepayer to provide grounds, reasons, and evidence as to why the assessment is wrong, and to set out the alternative valuation that is proposed. Only then will the VOA provide what is described as a “proportionate” response to the ratepayer’s challenge. This is the point at which any discussions between the parties will take place and it will conclude with the issue of a “decision notice” by the VOA that will set out whether, in the light of the challenge, they propose to make any alteration to the assessment, and what that alteration would be. Once such a notice is issued, or if no decision notice is issued within 18 months of a challenge, the ratepayer may enter a formal “appeal”.
An “appeal” can only be made within four months of completion of the “challenge” stage and will be limited to considering only the VOA decision notice and will make that consideration only on the basis of the evidence presented at the check and challenge stages. The introduction of any new evidence at this stage is to be limited. The “appeal” is made to the VTE and is likely to involve an appeal fee of between £100-£300, refundable if the appeal is successful.
There is general agreement that the present appeal system is not working satisfactorily, but the proposed new system seems more designed to discourage ratepayers, particularly smaller businesses, from appealing, rather than ensuring that the appeal process arrives at the correct outcome.
This is an assessed tax, rather than a self-assessed one, and it seems unreasonable that there should not be some onus on the VOA to explain how it has arrived at its assessment, and the evidence on which that assessment is based, instead of requiring the ratepayer first to provide the evidence as to why the assessment may be wrong. The proposed changes increase complexity by replacing a two-stage process (proposal and appeal) with a three-stage one (check, challenge and appeal) and do not allow for challenges in respect of properties that may be comparable one with another to proceed together. The proposals also contain quite sweeping powers for the VOA to decide what evidence may or may not be admitted and when discussions are to be deemed to be concluded.
Ratepayers are likely to be very concerned by some of these proposed changes and many will no doubt wish to make their responses to the consultation paper. The deadline for responses is 4 January 2016.