By Altus Group | July 1, 2017

Concerns about business rates increases from many firms in the hospitality and tourism industry have generated plenty of stark headlines since April’s revaluation, with calls for reform or even to completely scrap them loudly championed.

It is understandable, given the particularly challenging climate for many operators to stay profitable, currently navigating a ‘perfect storm’ of business rates increases, the threat posed by Brexit, declining sterling values, the National Living Wage and the apprenticeship levy.

We are acutely aware of these trials, and are working in partnership with the British Hospitality Association (BHA) to secure long term reform for the hospitality and tourism sector, and advise members on business rates.

Ufi Ibrahim, the Chief Executive of the BHA, told us, “due to the ‘bricks and mortar’ nature of hospitality and tourism, our industry is struggling to cope with unsustainable increases in business rates.  In the short term, proper transparency at the initial stages of the appeal process is essential, as is proper engagement with ratepayers and their representatives to develop a user-friendly digital platform.

“The BHA believes the appeals process needs to be completely overhauled and hope the Government will make it a priority to conduct a fundamental review of business rates.”

We fully support calls for a fundamental review; however, reform will not happen overnight.

The current mechanism of business rates taxation – while clearly complex and onerous – should not be ignored in the hope that it goes away, and there are meaningful changes that could be implemented easily within the current legislation to ease the burden for ratepayers immediately.

What business rates needs now is more transparency and an efficient appeals system.

In the hospitality sector, for properties such as hotels and public houses it is only possible to see the value and not the calculation behind that value.  For properties where the valuation is visible, the comparable evidence is not, making it difficult to know if the assessment is reasonable.

If you want more detail you have to navigate the Valuation Office Agency’s (VOA) abysmal new “Check Challenge Appeal” process.

It is ironic that the new system, whilst designed to reduce a backlog of appeals, is in reality slowing down the process, also making it hard to launch, and extremely complicated to prosecute, a challenge.

We would like to see a requirement for the VOA to make information, such as comparable rents or estimated trade figures, available to ratepayers to support the published valuation.  This need not be made public, but should be available to the particular ratepayer.

Such a simple change would appease many businesses that could see the logic behind the value, and enable appeals to be settled much more easily and, crucially, much more quickly.

Working with the BHA, we continue to lobby the government on business rates, and would like a commitment from the Chancellor for a consultation on potential reform of the system as a minimum.

The present business rates mechanism is not beyond repair, and operators who appeal their bills will eventually reach a resolution, albeit through persistence.

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