BUSINESS RATES

Occupation of commercial property is taxed by the Treasury. Business Rates are collected by local authorities on behalf of the Treasury, based on rating assessments set by the Valuation Office Agency.

A rating assessment reflects the hypothetical market rental value of that property – based on its use, floor area, age, specification, etc. – at the valuation date. Rating revaluations are usually carried out on a 5-yearly basis, the present (2005) Rating List having been assessed as at 1^st April 2003.

Common areas of dispute on rates arise from inaccurate assessments; subsequent changes to premises and/or usage; temporary disruption to beneficial use of premises (e.g. major road works); and de-listing of ‘derelict / redundant’ premises.

The amount of Business Rates actually paid is determined by a multiplier (UBR) which is set by the Treasury and adjusted in line with inflation. The UBR for 2009-10 is 0.485.

A new (2010) Rating List will take effect from next April, based on hypothetical rental values assessed at 1^st April 2008. The new assessments are expected to be published in draft this October / November allowing 6 months for rate payers and agents to check if the new assessment(s) is factually correct. The 2010 revaluation could compound any previous (inaccurate) assessments whilst the new UBR for 2010-11 could result in an unexpected increase in Business Rates liability.

On top of this is the very controversial move by government to reduce rates relief on empty commercial premises, with effect from April 2008. Designed to make the development industry more ‘efficient’ it seems to be having the opposite effect and is particularly harmful to occupiers with surplus accommodation. Not surprisingly, a number of ways are being employed to mitigate the effects of empty rates – some temporary and some more resilient. 

The 2010 Revaluation presents a real need for all business rate payers to have their new assessments carefully scrutinised and to appeal against any inaccuracies – which could result in useful operational cost savings.