Business Rates appeals regulations for 2017

Despite having undergone a lengthy consultation process, which we have commented on before in these news pages, the Regulations bring the new business rates appeals system into force were only finally laid before Parliament on 17 March 2017, to come into force on 1 April. There are two sets of regulations: The Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2017 (SI 2017/155) and The Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) (Amendment) Regulations 2017 (SI 2017/156). The only good news in these is that they apply only in England, not in Wales or Scotland, and only to the new 2017 rating lists, not to 2010 rating list appeals.

The new process set out in these regulations is known as “Check, Challenge, Appeal” and commences with a request to the Valuation Office Agency (VOA), which can be made by the ratepayer or any person having a legal interest in the property concerned, to check the information held on the property by the VOA. The check request will be made through the VOA’s electronic portal – part of the Government Gateway portal used by the tax service.

On receiving a request, the VOA must provide information it holds relating to the property and may specify any missing information that is to be provided. The information required as part of a check will vary from property to property, but is likely to include confirmation of physical details of the property; not just floor areas, but possibly also details of services such as heating or air conditioning. For properties that have not been valued on the basis of rents, the information to be supplied as part of a check could include receipts and expenditure information or building costs. This information, and any missing details requested by the VOA,, must be confirmed by the person making the check. This stage is completed when, either, the VOA notifies the ratepayer that the check is complete and of any changes made to the facts on which the rateable value is based and any revision to be made to the rating list, or, if the VOA makes no such notification, when 12 months has elapsed from the return of the information.

The check stage is vital because it will define the factual information to be used through the whole of the rest of the process, and the return of the check to the VO also sets the “material day” for any proposal – that is the date of the physical circumstances that may be taken into account in any proposal. There will ultimately be civil penalties applied for supplying inaccurate information but the fact that the new regulations were laid so late has meant that this provision does not appear in them and will have to find its way into later regulations.

Only once the check stage is complete will it be possible to make a proposal to alter the rating list. A proposal can only be made online, unless agreed otherwise by the VOA, and must be made within 4 months of the completion of the check stage, or up to 16 months for a material change proposal relating to changes in the locality of the property. For most cases, if more than 4 months has elapsed it will be necessary to carry out a new check. The grounds on which a proposal may be made are the same as under the present system but any proposal will now need to include: the grounds of the proposal including “particulars on which each of the grounds is based”; evidence to support the grounds; how the evidence supports the grounds; and details of the proposed alteration to the rating list. The phrase “particulars of the grounds” is only broadly defined in the regulations but appears to require much more detail than the present “incorrect, excessive and bad in law”. Likewise, the draft regulations do not define “details of the proposed alteration of the list”, but it seems likely that this will have to be a specific valuation or alteration, rather than the current “reduction to RV £1”.

Once a proposal is accepted by the VOA as “complete”, that is to say including all the required information, will the VOA will respond. There will then be the opportunity to discuss the proposal with the VOA and to agree an alteration to the rating list, or that the proposal should be withdrawn. If the VOA considers the proposal is incomplete it must state what information is considered to be missing and the ratepayer will have the opportunity to re-submit the proposal with the missing information within 4 months of completing the check.

If no agreement is reached in respect of the proposal, the VOA will issue a “decision notice” setting out its considered decision together with reasons for the decision. Only once a decision notice is issued in this way, or if 18 months has elapsed from the date of the proposal without a decision notice being issued, will it be possible to make an appeal to the Valuation Tribunal for England (VTE). An appeal must be made within 4 months of the date of the decision notice or the expiry of the time limit, and can be against either the decision notice or the failure to issue a notice.

An appeal will involve payment of an appeal fee of £300, or £150 if the appellant is a “small proposer”, defined as being an individual or a “micro-business” under the Small Business Enterprise and Employment Act 2015. An appeal will have to include a copy of the decision notice, if one has been issued, a copy of the proposal and any evidence forming part of it, and any information provided by the VOA as part of the check stage. The VTE will be restricted to considering only this evidence or further evidence if it relates to the grounds of the proposal and was not known, and could not reasonably have been know, at the end of the challenge stage.

The VTE must not take into account matters which did not form part of the proposal or were not raised in evidence or submissions and appeals to the VTE can only be made on grounds that the valuation decided by the VOA is not “reasonable”.

There is wide agreement that the present business rate appeals system does not work well, but the new system seems largely designed to create such an obstacle course as to deter ratepayers from making any challenge to their assessment. Taxpayers should be entitled to know the evidence on which their tax assessment is based, but the proposed new system requires them to state their case before they are even allowed to know that. The new regulations breach the rule that Statutory Instruments should normally lie before Parliament for 21 days. They are rushed and will be very confusing to ratepayers. The electronic portals through which checks, challenges and appeals are to be made are still being developed and this give ratepayers no time to prepare to use them. Those wanting to check or challenge their new rateable values are in for a difficult time.