According to business rates experts at Colliers, the Government must use Tax Day today to announce a unilateral RV (rateable value) reduction on business rates bills, and thereby resolve the COVID-19 MCC (Material Change of Circumstances) business rates appeals debacle – or matters could be disastrous for hundreds and thousands of struggling businesses.
Colliers call for government intervention comes hot on the heels of the Government’s Valuation Office Agency (VOA) refusal to restart talks with the RSASG (RSA COVID-19 Steering Group*) , the body set up to represent 85% of the ratepayers with outstanding COVID-19 MCC (Material Change of Circumstances)business rates appeal. The VOA’s refusal has been branded as “crazy and irresponsible” by Colliers.
Talks had been progressing until December when they were broken off by the VOA who has refused to engage since or to explain why. This refusal to engage has now led to a full blown campaign by the RSA and its members to bring pressure on the Chancellor to either take direct action himself or to order the VOA back to the negotiating table to discuss “the largest number of MCC appeals caused by a single event in rating history”. According to industry rumours, the former could now be likely.
According to Colliers many businesses that occupy office space have been severely impacted by the impact of COVID-19 and the various lockdowns. Businesses have been instructed by the government to leave their offices largely unoccupied with staff working from home and this has often led to a significant drop in productivity and profitability. Yet despite enforcing these restrictions, the government has to date expected all office-based businesses to meet their rates bills in full, both last year and in this. Unlike businesses in other sectors such as those in retail and leisure/hospitality, office-based businesses received no rates holiday in 2020-21, and only the smallest businesses were able to benefit from the initial government grant schemes. And nothing was offered by the Chancellor in his Budget on 3 March.
Colliers has estimated £5billion is at stake; money that would safeguard jobs in many sectors that have fallen through the cracks.
The height of the problem is seen by the fact the number of businesses appealing their business rates on the grounds of Material Change of Circumstance, is at its highest rate in rating history ever. According to the RSA the number of outstanding COVID-19 checks (the first step in the appeals process) is now around 400,000. Given the silence from the Chancellor in the Budget, this is expected to increase even further to at least 500,000 Checks, says Colliers.
As John Webber, Head of Business Rates says, “It is outrageous that whilst jobs are being lost by the hour and businesses prevented from occupying office space in towns and cities up and down the land, the Government in the form of the VOA has refused to either negotiate or to explain why it won’t. This is not only crazy, but it is deeply irresponsible and distressing for many of the businesses impacted.”
“The Government needs to make an announcement on this issue. Otherwise hundreds of thousands of businesses who already have had to go through the notoriously painful CCA system to register their displeasure of having to pay business rates on property they have all but been able to occupy for 12 months, will now have no choice but to continue the process and register a Challenge. This may need to be litigated through the appeals system. Given the lack of resources at the VOA, this process could take years to resolve, by which time many jobs and businesses may well be beyond saving.
It is also likely the VOA will need to handle these Challenges at the same time as it progresses the next Revaluation exercise, so delaying agreeing a sensible solution will only put further pressure on the system down the line, plus lead to further costs and expenses for all parties.
It is no one’s interest for there to be no resolution or for there to be lengthy litigation – neither for the hundreds of thousands of businesses impacted, the thousands of jobs potentially at risk, the VOA itself long term or the recovery of the UK economy.
“We urge the Government to direct the VOA to come back to the negotiating table with the RSA so this issue can be dealt with fairly and as swiftly as possible, or to take direct action itself. Either way British business deserves more consideration than to be left out to dry in this way.”
*The RSA COVID-19 Steering Group includes representatives from Montagu Evans, Colliers, JLL, GL Hearn, CBRE, Avison Young, Gerald Eve, Knight Frank, Cushman & Wakefield, Altus Group.