Businesses are still struggling with CCA, the new "Check Challenge Appeal" Business Rates Appeals System which is clearly not up to the job, according to rating experts at Colliers International, the global commercial real estate agency and consultancy.
In answer to FOI Requests made by Colliers International to the Government's Valuation Office Agency (VOA) concerning "Find My Business Rates" and the three part: "Check Challenge Appeal" system, the VOA revealed that in the five month period 20th March to 8th August 2018 over 85% of 505 respondents who had not yet completed the Check stage of the process, said they were dissatisfied or very dissatisfied (17% and 69% respectively) with the new system and only 3.2% were very satisfied. These figures largely mirror findings for the first year of CCA (April 2017 to March 2018) where a FOI revealed over 88% of the 2085 respondents in the period said they were either dissatisfied or very dissatisfied with the system too.
Putting the figures together shows that 87% of users trying to get their business rates checked were dissatisfied or very dissatisfied (17% and 71% respectfully) out of 2590 respondents in the 17-month period since CCA was introduced on April 1st 2017.
These figures also come hot on the heels of the VOA’s announcement that the number of appeals started in the 15 months since the 2017 rates revaluation (and since CCA came into play) have fallen by more than 86% compared to the corresponding period following the 2010 revaluation. Indeed, proceedings to challenge VOA business rates assessments have only begun on only 36,310 properties in England, which reflect less than 2% of the 1.88 million properties assessed for business rates. There were 266,870 appeals (over 7 times as many) in the same period after 2010.
“Over complicated procedures, lack of guidance and a largely un-navigable new on-line portal are discouraging those with good cases from challenging their bills,” said John Webber, Head of Business Rates at Colliers International. “At the very least businesses now need to employ agents to help them get through the system, whereas before many could appeal directly themselves.”
He added, “And the fact that only 36,310 checks have been registered (on 1.9% of the properties in England) suggests that 98% of businesses are happy with their current rating assessments, which is of course “delusional.”
CCA was introduced on the day the largest changes to business rates in a generation were published in April 2017. This included significant rate increases across London and the South East alongside a downside transitional scheme for the rest of the UK that offered little respite to rate payers in the depressed areas. This has caused chaos and economic difficulty for many businesses, particularly retailers - as reported in the latest business news.
To counter this criticism, the VOA has claimed that those companies that have finally managed to negotiate the system and get past the Check stage of the process are happier about it. A VOA Satisfaction Survey of over 2000 companies past the Check stage found 47% were satisfied or very satisfied with their experience. However, this could be because 71% of those whose cases have been resolved have found themselves successful in their battle with the VOA and now have a reduction in their rates bills. It is difficult to work out if they are satisfied because they have won their cases or whether because they were happy with the system
Moreover, as John Webber adds, “Turning the figures on their head, 47% satisfied, still leaves the majority- 53% -either impartial or dissatisfied, and that’s with 71% of them successful in their appeals. “
He added “And whilst it sounds great for ratepayers to see 71% of Checks have led to a reduction in rate bills, one wonders why this win figure is so high and what it says about the quality of the VOA assessments in the first place. Given so few companies have managed to get to this stage and actually register for a check, you are left wondering about all those thousands of others who have given up making the challenge. There are many companies deserving fairness, but many find it too expensive or time consuming to pursue. “
Complaints about the system have also little changed in the 17-month period. Still high on the list was the wish to “Have people you can actually talk to so as to explain the situation.” Users still seem frustrated that there is no one that can guide them through the system, no one to explain their issues to and no opportunity to even put forward their reason for challenging their business rates assessment.
As Webber comments further, "The lack of planning, insignificant time to trial the system before it went live and apparent lack of desire by the government to engage with agents and their software providers has resulted in an appeal system unfit for purpose, however the VOA tries to dress up the figures. With the 2017 rating revaluation producing some of the largest increases in liability in a generation, and 2018 building up further rises, it appears this government has proved again that it neither understands the pressures facing businesses or has a willingness to act on calls to change "
Notes to Editors
* CCA came into force on 1 April 2017, despite voiced concern from business rates professionals that it had not been properly thought through. It requires ratepayers to check the information held on the property by the VOA as the first step in the process. Multiple properties held in a portfolio must each be claimed separately and the identity of the ratepayer must be proven with supporting documentation, making the process difficult and cumbersome.
Colliers Manifesto for Business Rates Reform includes:
1. Immediately freezing any business rate increases next year - not the unsustainable 49% for top rises as currently planned. Such businesses will have already have had to swallow a rise of 74% plus inflation in the last two years
2. Immediately remove downward phasing of business rates payments enabling rate payers to pay their true rates liability now and not wait four years to do so. This could well impact on several decisions to either close or keep open stores in a number of regional high streets.
3. Review and implement a policy to reduce the multiplier. (The UBR against which the rateable value of the property is multiplied to give the final rates bill.) This multiplier is currently around 50p in the £1- so is an effective 50% tax. If it could be reduced to say 34 p in the £1, as it was in 1990, many of the extremely high rating bills would be diminished into something businesses could meet.
4. Look at the whole systems of reliefs. The current relief system is incredibly complex and has created business rate deserts in the country, where due to the system of small businesses reliefs, some businesses are paying no business rates at all for the services they receive.
5. Introduce a fairer system of how the business rates tax take is funded- Webber suggests a rebasing of the multiplier could be paid for by asking all small businesses to pay a minimum contribution to the system and looking at other reliefs, such as agricultural reliefs which may need reforming, therefore spreading the load more evenly across the UK economy.
6. Reform the appeals system- providing more support to the VOA to deal with existing appeals’ backlog. CCA (the new business rates appeals system) introduced last year has been described by Webber and other commentators, as the “car crash ready to happen” since it has introduced an over complicated appeal system that few can navigate. Only around 36,310 properties have begun to check and challenge their rating assessments i.e. 1.9% of the 1.88 million rateable properties in England. It is essential that businesses have a true and fit for purpose appeal system, if they believe they have been assessed unfairly.