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The Department for Communities and Local Government has now published its response to the consultation “Check, challenge, appeal: reforming business rates appeals” and has set out preliminary details of the reforms it proposes to introduce.The response document records that there were over 200 responses to the consultation, but makes clear that the majority of the changes proposed in the original consultation will be introduced unaltered. It still contains little hard detail as to what will be required of ratepayers at each stage of the process, noting simply that there will be further consultation about draft regulations “during the summer”. What is put forward is that the present two-stage process for challenging business rates assessments (“proposal” and “appeal”) will be replaced by a new three-stage process of “check”, “challenge” and “appeal”.
The “check” stage will require the ratepayer to verify information held by the Valuation Office Agency (VOA) regarding the property. It is still not clear exactly what information will be required to be verified, but it appears likely that this will include physical details of property and details of any rent paid. This will be done via an online account that will enable the ratepayer to verify VOA information, or to put forward alternative information. This stage will be more than merely an administrative exercise, because the government proposes to introduce civil penalties of up to £500 for ratepayers who “carelessly, recklessly, or knowingly” provide false information. In addition, the information provided at this stage will be used in both the later stages, so the provision of this is binding on the ratepayer. Only once this “check” stage is completed will a ratepayer be able to enter a formal challenge against their assessment, although there will be a right to move to the next stage if the “check” is not completed by a response from the VOA within 12 months.
The “challenge” stage, will require the ratepayer to set out the reasons why they believe the existing rating assessment to be wrong; what alternative assessment they consider to be correct; and the evidence that they have to support their view. It is only once a ratepayer has entered a challenge that, in the opinion of the VOA, supplies all this information will the VOA actually respond with their evidence to support their assessment, and be willing to discuss the challenge with the ratepayer. If the dispute cannot be concluded at the challenge stage the VOA will issue a “decision notice” setting out whether or not they propose to make any alteration to the assessment in the light of the challenge, and giving reasons for the decision. Only when a decision notice has been issued, or if no decision notice is issued within 18 months, will a ratepayer be allowed to make a formal appeal. This is a major burden for ratepayers and is one which smaller businesses may find hard to fulfil without specialist advice because they will have no knowledge of what evidence the VOA has used to arrive at their assessment.
The final stage, the “appeal”, is an appeal to the Valuation Tribunal for England against the decision notice issued by the VOA, or the VOA’s failure to issue a decision. An appeal will normally involve a fee of £300, although there will be reduced fees for smaller businesses. These appeal fees are refunded if the appeal is successful. In hearing the appeal, the Tribunal will be limited to considering only matters raised at the “challenge” stage, and the introduction of new evidence will not be allowed other than in exceptional circumstances. This seems contradictory to the proper role of a Tribunal which would normally be to consider all relevant evidence.
These are major changes. They will apply from 1 April 2017, but only to appeals against the 2017 Rating Lists. At present they will apply only in England, but Welsh ministers have reserved similar powers under the Enterprise Act, and Scottish government is undertaking its own review of appeals. Draft regulations for England will be put forward “over the summer” of 2016 setting out full details of the processes, and information required at each stage.
There seem to us to be three major flaws with the new process.
Firstly, what is proposed represents the triumph of process over outcome. The purpose of a challenge against a rating assessment is to agree what is the correct and fair assessment for the property concerned. That is the substantive dispute. What this process requires is for the ratepayer to complete agreement of all non-substantive matters, via the “check” stage, before they are allowed to address the substantive dispute. This seems wasteful of ratepayers’ time and resources
Secondly, these are not the proposals of a confident system. A confident system would say to ratepayers “here is your assessment, here is how we have arrived at it, and here is the evidence we have taken into account”. Instead what is proposed is only limited disclosure to the ratepayer, and a defensive approach to dealing with the dispute.
Thirdly, and perhaps most importantly, these proposals seem to say to ratepayers “pay up, and shut up”. Yet ultimately it is the ratepayer who pays for the whole process including the costs of the VOA and the appeals system. But despite this, the proposals appear to treat the ratepayer with arrogance, and some might say with contempt. That is a sad and disappointing outcome to a lengthy consultation about what is a major liability for ratepayers.
