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MONTAGU EVANS PRESENTS...NEWS & ARTICLES

| 1 minute read

WHAT'S THE FREQUENCY, KENNETH?

The government has passed the bill that facilitates the increase in the frequency of business rates revaluations from the traditional five years to three years from 2021, and in so doing reduces the current period to four years.

More frequent revaluations have two main benefits and one pretty big flaw; ultimately they bring rateable value more in line with prevailing rental values (increasing confidence in the system) and they allow economically driven and systemic changes in property value (which don't count as materially changes) to be reflected in property assessments more often. 

But they come at a cost, literally.

Revaluations are no mean feat and they drain the VOA's already tight resources. The impact on "business as usual activities" such as dealing with appeals and list maintenance is fairly obvious when a reval is underway and there would be no respite

And no sooner has government announced a commitment to three yearly revaluations, ostensibly giving business exactly what it has asked for, then the call goes up for annual revaluations.

Three yearly revaluations require a shortening of an otherwise tried and tested process but no fundamental change to how revals are done. A move to annual revaluations, whilst I'm sure achievable, would require something more radical and government would need to resource the VOA adequately, both in terms of workforce and systems. 

The quid pro quo would have to be an acceptance from business that we would need to operate in a far more transparent world in terms of rental evidence (something that no everyone is keen on). Equally, it's inevitable that it would require a greater burden to be placed on ratepayers in terms of advising the VOA and Local Authorities about changes to the property etc. 

And whilst annual revaluations might sound attractive from a headline perspective, I'm not convinced that any benefits over three yearly cycles would offset the difficulties (and costs to both sides) in implementing them. 

My advice - give three years a chance and take stock. Better to focus efforts on the other crucial reforms the system desperately needs:

1. A material reduction in multiplier for all property types

2. A simplification of reliefs and exemptions, including the scrapping of downwards phasing

3. An appeal regime that's fit for purpose.

The CBI published the three-part “business manifesto” today, which included calling on the next prime minister to “publish a road map to delivering annual business rates revaluations to increase alignment between the tax and the economic cycle at Budget”.

Tags

central government, rating, valuation, local authority, insight