Chancellor Phillip Hammond delivered his first Spring Statement to the nation. Unlike the Autumn Budget, this was more of an update on how the economy is performing. As such, no big announcements or surprises were expected. But true to form, ‘Big Phil’ did have one little surprise up his suit sleeve.
Having confirmed in last year’s Budget that business rates revaluations will take place every three years instead of the current five, in order to ensure rates more accurately reflect the rental value of properties, the Chancellor announced that the next revaluation will be brought forward a year from 2022 to 2021.
He also confirmed the Government will not be going ahead with a self-assessment style system for business rates, which was being considered ahead of the Autumn Budget. The announcements were widely welcomed by industry professionals and business organisations.
Helen Dickinson, chief executive of the British Retail Consortium, said more frequent revaluations were a “step in the right direction”.
Retail is one sector that has been hit hard by the rise in rates bills following the 2017 revaluation, with a number of well-known High Street retailers calling in administrators or collapsing under the weight of spiralling costs, increased competition and changing market dynamics.
A shorter three-year revaluation cycle should help avoid the massive hike in rates we saw in 2017 and make the impact on businesses less severe. However, the two-year antecedent valuation date (AVD) makes no sense for a four-year revaluation and is laughable for a three-yearly review.
Whilst a shorter valuation period has benefits in terms of the speed at which changes are passed on to ratepayers, this brings with it additional costs for the Valuation Office Agency, not to mention the extra workload. What is clear is that neither ratepayers or local authorities will be willing to pay for it.
One of the biggest criticisms of the VOA is that it is not adequately resourced, and with plans announced to cut its budgets further, resulting in the loss of more jobs, it begs the question if the VOA is geared up to cope with these changes?
Then, of course, there’s the issue of the ‘Check, Challenge, Appeal’ (CCA) process, which continue to be a bone of contention for ratepayers and rating professionals alike.
If MPs continue to believe the hype that CCA is a resonant success, we will not move in the right direction. Most ratepayers and agents will confirm that the CCA process just does not work. The whole system is flawed and blatantly hides previously available transactional information which was available in previous lists.
Another point worthy of mention, which Phil failed to address, is that the shift in revaluation timeframes will limit the time for transitional relief to take effect. For example, if you have an assessment that sees a large increase then the ratepayer is likely to be hit with that higher liability sooner, having less time to factor this in to their cash flow.
It’s good the Government is introducing measures to ease the burden of business rates on business, but there’s more that could still be done.
A step in the right direction? Maybe. Let’s wait and see.