Business Rates During a Pandemic

November 26, 2020

Rarely does a day go by without business rates appearing in the national press, and its impacts are under even greater scrutiny following Covid-19. What is the government’s response and what can ratepayers do to alleviate the rating burden during this challenging time?

There is some positive news for all, a 1.6% universal reduction in all rates liability for this financial year. However, this only reverses the increase to the national rates poundage used to calculate rates bills. Many businesses not eligible for Covid relief schemes have not seen any real reduction in their liability. There are also cases where rates relief may be available but has not been applied automatically. The advice is to scrutinise bills for accuracy as there are many instances where there are errors or that relief has not been applied (most schemes are by application only).

Regardless of whether you currently qualify for rates relief, the most effective mechanism to reduce rates liability is to challenge the rating assessment through the appeal process. The Covid-19 outbreak is arguably the clearest material change of circumstances in the history of rating, and every landlord, tenant or occupier has the right to appeal on these grounds. If you have not considered an appeal following Covid-19 then I strongly recommend doing so as soon as possible. This applies to all sectors including those in receipt of full relief this year as once the relief is removed then the normal liability will resume.

Ratepayers should also stay alert to adjustments in their Rateable Value brought about following development works on existing subjects, such as extensions or renovations. Any change in Rateable Value can be challenged through the appeal process and it is always worthwhile having a rating valuation audited to ensure it is accurate (time restrictions apply). There is also potential to claim rates relief following an increase to Rateable Value, but this must be applied for.

New legislation also came into force on 1 April 2020 which should not be overlooked. The Non-Domestic Rates (Scotland) Act 2020 has paved the way for significant changes to the rating system. Of particular note, significant penalties are to be introduced by the end of 2020 through secondary legislation for non-compliance with Assessor Information Requests (e.g. rental or cost-based information), which are regularly issued. These will be severe for continued breaches and the fines are cumulative, potentially equating to 71% of the Rateable Value of the property. There will be an opportunity to appeal against any fine to the local Valuation Appeal Committee, but proactive action to prevent financial penalty is clearly prudent.

Looking ahead, the new 2020 Act introduces more regular revaluations on a three rather than five-yearly cycle. This will commence from the next Revaluation which was recently postponed by one year to 1 April 2023. This postponement is itself unwelcome news for North-East businesses who now face a further year of rates payment on disproportionately high Rateable Values in comparison to current and much lower market values.

For further details on how FG Burnett can assist with Business Rates advice, contact Richard Foster – richard.foster@fgburnett.co.uk

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