A review is on the way
The business community and property industry appear united in their desire for wholesale change, with the rates system being scrapped and replaced with something that is more appropriate to modern business patterns. In his last Budget, the Chancellor finally announced that he was going to do something about it; he did what all good politicians do these days and announced that there would be a review of the 400 year-old tax, with the results announced some time in 2016. We'll just have to wait and see how that turns out.
Secondary locations are suffering
The recession has been kinder to some towns and cities than others and, without naming names, it's clear to all that the rates burden is making it extremely difficult to let vacant units (and to keep existing units trading) in many secondary locations. None of this has been helped by the decision to delay the 2015 rates revaluation for two years and to rebase the 2017 valuation on 2015 rent levels rather than the originally planned 2013 rent levels in the hope of seeing some rental growth to help take the sting out of the revaluation for the Local Authorities. Of course, I have a great deal of sympathy for Local Authorities who are struggling with budget cuts and who have (in Scotland) faced an across the board Council Tax freeze for the last 7 years. The money has to come from somewhere but, at the moment, it seems that a disproportionate part of the burden is being placed at the door of rates payers, which presents a serious barrier to inward investment in those secondary locations that need it most.
Rating appeals backdating backstop
Anyway, all this is a very nice history lesson, but it's not what I wanted to talk about today. Despite the much reported austerity cuts, the annual budget deficit continues to rise and George Osborne has been criticised by some for following a form of tax and spend Keynesian economics that was pursued by a prior incumbent of Number 11, Gordon Brown, snappily termed "Osbrownomics".
If we learned nothing more from Gordon Brown's tenure as Chancellor, it was to look carefully at his Budgets as, if we looked hard enough, there was invariably some hidden quirk smuggled into the fine print that was sure to surprise. And true to form, Gideon has managed just that by slipping in a rather nasty sting in the tail, hidden behind the better publicised consultation on business rates review, and here it is: Any successful rating appeals that are made after 1st April 2015 will only be able to be backdated to 1st April 2015.
Until now, a successful appeal could have seen refunded rates backdated to 1st April 2010 (and indeed that remains the case for those appeals that are launched before the April 2015 cut off). Going forward however, the door on that potential windfall for businesses will be firmly closed, meaning that your appeal may be something of a pyrrhic victory if it's not accompanied by a nice cheque from the Local Authority.
The change hasn't been widely publicised, but if you are thinking about making a rates appeal, then the message is clear - make it top of your list of New Year's resolutions. If you don't, then you might just miss the boat.
Morton Fraser can't offer technical advice on rating valuations or making appeals, but if you don't know a good rates surveyor then give us a call and we would be happy to make a couple of suggestions.