The new VOA (Valuation Office Agency) business plan and annual report, just published, gives a rose tinted view of what the VOA has achieved in terms of business rates, says John Webber, Head of Business Rates at property consultants, Colliers International.
Webber feels such a report is disingenuous at a time when many companies, particularly retailers and those in the hospitality sector are suffering from the unfair business rates system and in addition are finding it increasingly difficult to dispute their bills because of the state of the appeals system: Check Challenge, Appeal (CCA), introduced in April 2017.
According to Webber the VOA, which is responsible for collecting £25 billion in business rates revenue and £30 billion in council tax for local billing authorities has painted a golden picture of what it has achieved in the past two years. In particular he disputes the VOA’s claim that it has “improved the digital journey for our customers and worked closely with stakeholders and partners to deliver a reliable revaluation”. In terms of CCA, it claims it has “met all of the milestones published in the road map”, “delivering digital improvements”. “Such claims are ridiculous" says Webber, “In reality, everyone knows CCA has been an unmitigated disaster.”
CCA was introduced despite voiced concern from business rates professionals that it had not been properly thought through. Aimed to speed up the appeals system by striking out any unnecessary claims early on and by using an on-line portal system, the VOA asserted this would create a much more streamline system from which companies could benefit.
In reality we now have a much more cumbersome system than was in place previously.
The strain on the system is evident - only 258,170 properties have been approved by the VOA to begin the Check system in the two-years since introduced. Of these only 82,400 Checks have now been registered - less than 5% of the 1.88 million properties assessed for business rates in the country. 175,770 are therefore potentially still sitting in the system, and will be coming down the line in the months ahead. And the 82,400 properties in England checked compares to over 441,000 appeals in the same period after 2010, when it was almost five times as many.
The pattern for 'Challenges' is not much better. Latest figures show that of the 12,930 Challenges registered only around 37% (4,740) have been resolved and 6,980 are outstanding. In March 2019 - 700 Challenges were cleared, BUT 1440 Challenges were submitted. This differential between the two figures is growing every month showing that the system is going to increasingly struggle to clear such challenges.
Frustration with the system is borne out by Colliers’ own FOI requests to the VOA about the process. Since launch, 87% of users out of 2928 respondents trying to get their business rates checked have been dissatisfied or very dissatisfied (17% and 70% respectfully). And in comments about the system, respondents seem most frustrated about the lack of clarity about how to navigate it, lack of opportunity to provide comment or explanation about their individual cases or why they are appealing the rating valuation; and lack of having someone to explain their case to.
Such complicated procedures and the largely un-navigable online portal seem to have actually discouraged many companies from starting the whole CCA process, despite many with good cases for challenging their bill. And for those that do, the slow rate at which they are being processed is alarming.
Looking forwardAnd not only has past performance of the VOA been poor, but according to Webber, future attainment levels look unrealistic. He continued, “The VOA has claimed that in 2019-20 it expects CCA to complete work on around 122,500 checks and 9,500 challenges. Given it has averaged only 41,200 checks per year over the last two years, I’d be amazed to see how they manage to clear 3 times as many next year. And in terms of Challenges, it has averaged resolving only 2,370 Challenges per year over the last two years, so how on earth does it expect to resolve over four times as many next year?”
As Webber points out, it is not as if the VOA is taking on substantially more staff. It is true in 2018/9 the VOA received 560 new joiners - but 529 left, a churn of 17% of its workforce. And the number of offices from which staff work will be reduced too.
The VOA is also dealing with the next 2021 Revaluation, for which properties have needed to be valued as of April 1st 2019. The Government decision to move from a five year to four-year valuation was all well and good, but it has put additional strain on a system that is already well stretched.
“Of course, in reality, what the VOA will have to do, if it is not going to improve its system or employ significantly more people, is to dress up the figures by moving any dispute further down the the line. Checks will be shunted into Challenges and Challenges into Appeals. Businesses will just be left longer to wait to get a proper hearing and to get matters resolved.”
“None of this is good for UK business PLC or even UK smaller businesses who have stretched resources. The number of companies that get in touch because they want help in negotiating the whole system proves the point. You really need to be an expert to get through the system now.”
Webber concludes, “The VOA has produced two beautiful documents, many pages long, extolling its virtues and written in a way to appeal to the consumer. It is a shame the same sort of time and money was not spent improving its appeal system and making that user friendly as well.”