With the 2017 revaluation of business rates just around the corner, all owners and tenants of non-domestic property need to be aware of how the impending revaluation affects them.
Initial analysis of the industry shows that values have fluctuated significantly across the country and through different property sectors. Here we look at the process of the revaluation and ways to appeal against the decision by the Valuation Roll Assessors.
Revaluation - only six months to appeal
All rate payers should by now have received their Valuation Notice, which details the new proposed rateable value of their property. The new rateable value will come into effect on 1 April 2017 and will last for a five-year period. Purchasers and tenants of commercial properties should make sure that any rates information provided to them reflects the revalued rates figure, and not the previous figure.
Notwithstanding the recent concessions given by the Scottish and UK Governments to ease the burden of increased rates, we anticipate large-scale appeal of rates revaluations.
Should you wish to challenge your property's rateable value it must be done before 30 September 2017. If it is not appealed within this 6-month period, then your appeal rights may be lost until the next revaluation, scheduled for 2022.
Appealing the decision
If you think the rateable value for your property is wrong, you can ask the Valuation Roll Assessors to check the details. Appeals may only be made in the following limited circumstances:
- where there has been a manifest error in the rates bill;
- where there is a change of owner, tenant or occupier in the property; and/or
- where it can be proved that a material change has occurred which has an adverse effect on the value of the property.
Any appeals should be made to the relevant Assessor at the address stated on the Valuation Notice. This can be done via email, letter or online by going to the Assessors portal at www.saa.gov.uk. There is no fee for lodging an appeal.
The facility built in to the SAA Portal is likely to be the simplest way to lodge an appeal as it will ensure that you provide all the salient information for a successful appeal. This is due to be operational from 1 April 2017 and - once available – will helpfully provide an immediate receipt to show that an appeal was safely received by the Assessor.
If the matter cannot be resolved by negotiation with the Assessor, it will be heard by an independent Valuation Appeal Committee. Complex appeals may be heard by the Lands Tribunal of Scotland. Further appeals can be made to the Lands Valuation Appeal Court.
Importantly, you must continue to pay your rates bill (at the revalued level) until an appeal is decided or you may face recovery action. If your bill is reduced following a successful appeal, you will receive the amount you overpaid and possibly interest, depending on the reduction.
What are Material Changes?
Appeals under points 1 and 2 above are easy to quantify – both are factual matters – but it is more difficult to successfully appeal on the basis of a 'material change' of circumstances. This is simply defined in the legislation as "a change of circumstances affecting [the property's] value", however recent judicial decisions in Scotland suggest that, in order to meet the requirements, the change must be something "significant" or "exceptional" which has a direct effect on the value of the property.
Examples of recent events which met the material change threshold for the last revaluation were:
- the Edinburgh tram works or other severe disruption as a result of roadworks;
- the economic recession of 2008; and
- the smoking ban.
The assessors can be asked to take any matters which have a direct effect on the rental value or occupancy of the property into account. Any reduction in rates for a material change, whether temporary or permanent, will start no earlier than the date the appeal was lodged. If the change is of a temporary nature (e.g. a road closure or roadworks) you will lose your right to a reduction if the appeal is not made in a timely fashion. In all cases, the sooner you lodge an appeal the better.
If you do choose to appeal your rateable value, it will be essential to produce evidence as to how the material change has impacted on your business. The best evidence would be the turnover over the periods before and after the change, contrasting this with the previous year. The difference in rental value (or turnover) must directly result from the material change in circumstance of the property.
We would recommend speaking to a rating surveyor as soon as possible to find out whether any of the limited circumstances for rating appeal might apply to your property.
Harper Macleod can assist in preparing your case around events which could be considered "material change".
Get in touch
If you would like to speak to Harper Macleod's Real Estate team about this or any other commercial property issue, we would be delighted to help.