A recent case in the Upper Tribunal (Lands Chamber) highlights the dubious practice whereby nearly a quarter of the number of appeals made by rate payers against their business rates valuation are being struck out unjustly, or on a minor technicality, leading to hardships for many small businesses, according to Colliers International, the global commercial real estate agency and consultancy.

John Webber, Head of Business Rating at Colliers International said "It has been scandalous how the VOA and VT have colluded to keep appeals out of a fair hearing and we are delighted the leading judges of the country have recognised and condemned this practice."

According to Colliers, the case*, which Colliers took to the Royal Courts of Justice, together with four other cases heard at the same time, exposes the flaws in the rating appeals procedure and how the Valuation Tribunal for England (VTE) and the Valuation Office Agency’s (VOA) have been pursuing an aggressive and unhelpful approach in dealing with rating cases, leading to many cases being dismissed on technical terms, rather than the merits of the case.

In their judgement, the two most senior property judges in the land, Sir David Holgate and Martin Rodger, President and Deputy President of the Lands Chamber criticised both the VTE and VOA for the stance they have taken. The judges stated that it was grossly unfair that rate payers were losing the right for their cases to be heard, and in many cases appeals being struck out by the VTE, due to a minor breach of VTE procedure, which the VOA invariably supported.

The judgement said, the VTE must now review its processes and ensure that it follows its own rules, and must avoid adopting an in-discriminate zero tolerance approach- at the expense of maintaining an accurate rating list.

In a similar way, the Tribunal was clearly concerned that the Valuation Office should not take advantage of alleged procedural irregularities to support the striking out of appeals in cases where it is clear that the rating list is inaccurate or there is a valid valuation issue to consider.

Research by Colliers International further backs up that this trend to strike out appeals without proper justification has been taking place.  Latest figures concerning appeals against the 2010 Ratings List show 937,430 cases have now been resolved, with around another 200,000 to go. Of those 937,430 cases 254,400 (or 27%) have resulted in a win for the ratepayer, with appellants gaining a reduction in their rate bills. However, 221,360 cases or 24% of cases have been struck out, even before getting to court.  This is a high percentage and the reason why many businesses are disputing the decisions, and the judges appear to be backing them up. 

John Webber continued: " The VOA continually claims that as only 27% of appeals get resolved in the favour of the ratepayer, the old system of appeals was not fit for purpose. They argue that by definition 73% of cases are spurious - and hence justify the move to the CCA (Check Challenge Appeals system) to counter this. Yet when you realise that 24% of appeal cases are struck out, many on a technical hitch or incorrect procedure, before getting to court, it shows how this argument does not stack up. This means over 50% of cases could very well have resulted in a win for the ratepayer had they been heard." 

"It has been scandalous how the VOA and VT have colluded to keep appeals out of a fair hearing.“  

"At the end of the day it is the small businesses that are suffering. Those without the resources to navigate their way through a complicated and highly technical procedure."

The judges concluded that in future the VOA will be expected to adopt a more principled approach to negotiation from the outset, which should benefit all rate payers and their agents. 

They made the important point that “compliance with rules is not to be regarded as an end in itself and should never be allowed to assume a greater importance than doing justice in each case”.