Business rates revaluation: how to appeal with VOA before April 2023

The Valuation Office Agency (VOA) has issued the business rates revaluation for 2023 and the window to save money is closing. Here’s how to appeal before the 1^st April deadline.

The Valuation Office Agency (VOA) has recently updated the rateable values of all business and other non-domestic property in England and Wales. These values will come into effect from the 1^st April 2023, one day after the deadline for appeals for businesses. If the opportunity is taken to make an appeal, then significant savings could be made.

Jo Morgan from Coodes’ Commercial Property team and Jordan Kennedy, Senior Surveyor and Head of Business Rates Consultancy at Vickery Holman Property Consultants explain.

Buying or leasing commercial property

There are currently 2.14 million non-domestic properties in England and Wales with a total rateable value of £70.3 billion.

Local councils will use the rateable value of a commercial property to calculate a business rates bill. Rateable values are based on the annual rental value of a property on what is known as an antecedent valuation date. The valuation date for current rateable values is 1^st April 2015. From this April, the valuation date will be 1^st April 2021.

Business rates bills are calculated by multiplying the rateable value against a multiplier which is set by the government. These bills also account for any reliefs that a commercial property can obtain. In 2021/22, for example, small business rates relief meant 740,000 businesses did not have to pay any business rates at all.

When buying or leasing commercial property, our clients should always be mindful of business rates. This is because they’re often a significant outlay for business owners and it can mean the difference between the viability of premises or not.

In fact, we have seen first-hand clients who have walked away from a deal as they had not factored business rates into their initial costings and later found that due to this, the venture was not viable.

Business rates

Business rates are a tax on the occupiers of the land and the buildings they occupy. This tax is calculated by the Valuation Office Agency (VOA). The Valuation Office Agency estimates the open market rental value of a property on what is known as an ‘antecedent valuation date’ (AVD). In other words, this is the date exactly two years before the date of a revaluation.

This estimate of the open market rental value of the property is what becomes known as the property’s rateable value. This is then multiplied by a rate determined by the government to produce the annual business rates liability.

Rateable values will be updated periodically in order to better reflect the current market and accommodate for economic change. We are currently approaching the end of the 2017 rating list, with values being based on an antecedent valuation date of 1 April 2015.

2023 rating list

The draft 2023 rating list has now been published and shows that the 2023 business rates revaluation looks set to reduce retail and office rateable values in the South West by 5%. Of course, this will be welcomed by owners and occupiers of these property types. Conversely, industrial occupiers face on average a 27% increase in their rateable values. Caravan parks and car showrooms face average increases of 32% and 23% respectively.

You can see your current rateable value and future value using the business rates valuation calculator on the government website.

Whether your rateable value is set to increase or decrease, it’s important to make sure your business rates liability is based on correct and fair information. Action can and should be taken now to make sure you are paying only what you should, now and in the future.

The Valuation Office Agency assesses the rental value of retail, office, and industrial properties by applying a rate per square metre to the floor area. Therefore, it’s important to check the floor area informing your rateable value is correct. If the VOA is basing its assessment on too high a floor area, your rateable value could also be too high.

It’s possible to inform the VOA that you think the actual valuation (price per square metre) of your property is wrong. This needs to be proven with reference to comparable evidence at the antecedent valuation date, which is fast approaching.

What this means for the hospitality sector

There will be changes to the rateable values of businesses within the hospitality sector too. In a county such as Cornwall that is heavily reliant on a bustling tourist industry, what does this mean for business owners?

The rateable values of trading entities such as holiday parks, pubs and hotels are calculated by reference to the fair maintainable turnover (FMT) of the actual business. For these property types, it’s important to ensure the fair maintainable turnover the VOA is basing its assessment on, fairly reflects the actual turnover of your business.

The Valuation Office Agency has also issued a reminder that there have been changes to the eligibility rules for self-catering properties from the 1^st April as well. Currently, holiday lets in England need only be available for commercial letting for 140 days or more out of the year to qualify for business rates.

After the 1^st April, the same threshold applies, as well as a new threshold, that states the property must have been actually commercially let for 70 days within the last year. That means these new thresholds are going to be applied retrospectively and it’s something holiday let owners need to be aware of.

Should they have not met those requirements before the 1^st April 2023, then they will no longer qualify for business rates and must pay council tax charges.

Rateable value reduction appeals

Vickery Holman Property Consultants can tell you if they think it will be possible to have your rateable value reduced and can work with the VOA on your behalf by following the Check, Challenge, Appeal (CCA) process.

As the draft 2023 rating list has now been published, factual errors in your property valuation (such as the floor area) can be corrected prior to the list going live on the 1^st April. This could lead to a reduction in both your current and future rateable value. However, appeals to the actual rate per square metre applied in the valuation of the property cannot be submitted until after the 1^st April 2023.

Meanwhile, any errors discovered in relation to the rateable values in the current 2017 rating list can also still be appealed using the CCA process. This is so long as the process is started before the 31^st March 2023. Any savings can be backdated as far as the 1^st April 2017 depending on individual circumstances. Now is the time to act to make sure that no opportunities are missed to appeal.

Need further advice?

If you’re either starting a new business or just looking to appeal, take advantage of this period before the 2023 rating list is introduced. Always factor in business rates if you’re considering leasing or buying premises for your business.

For help with checking your business rates, please contact Jordan Kennedy from Vickery Holman Property Consultants on 01872 245525.

For any help or advice on these issues, please contact Jo Morgan in the Commercial Property team at Coodes Solicitors on 0800 328 3282 or jo.morgan@coodes.co.uk.