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Financial penalties on the way for errors in challenging rateable values

Businesses already struggling to come to terms with the complexities of the 2017 rates revaluation process now face financial penalties for errors in trying to challenge the system.

Rates bills for 2018–19 are being received now by businesses in Hull and East Yorkshire and have increased in line with the consumer price index.

Adrian Smith, founder of Hull-based AS Rating, said on top of the inflation-led increase in rates bills many businesses are also suffering financially because of the complications around the new system. He also warned that recommendations from the House of Lords could lead to the maximum penalty being increased.

Legislation currently going through Parliament will authorise the Valuation Office Agency (VOA) to charge up to £500 from anyone who “knowingly, recklessly or carelessly” provides false information as part of the check, challenge, appeal (CCA) procedure.

The House of Lords voted in favour of the legislation which would bring the introduction of penalties of £200 for small businesses and £500 for all others, but in doing so they urged an increase in the upper limit, which they considered to be insignificant for large businesses.

The House also highlighted problems with the 2017 revaluation process and the CCA procedure. Lord Bourne of Aberystwyth, who had moved the regulations, said he would write to the VOA to ensure they are working with businesses and agents to minimise any burden and to ensure that guidelines are being issued about the circumstances in which penalties will be imposed.

The Earl of Lytton, a property consultant and vice president of the Local Government Association, had said that many ratepayers were being “scapegoated” for the actions of “so-called business rates consultants” who had made frivolous appeals and provided false information in the past.

The Earl acknowledged that there were problems which need to be addressed, but he added that the risk of businesses incurring a penalty is high because of the complexities around CCA.

By the end of December 2017 that the VOA had not received any appeals from the revaluation which took place in April 2017. The current figure is three appeals, but there are still around 200,000 outstanding from the 2010 revaluation.

Nationally, with a total of 12,840 checks registered by December there were 4,120 outstanding. The number of challenges registered was 1,120, with 800 outstanding. In Hull, 50 checks were registered, with 20 outstanding. In the East Riding, 10 checks remained outstanding from 40 registered.

Figures for challenges have not been released for the local areas but in Yorkshire and Humber there were 120 registered with 70 outstanding.

Adrian said:

No one should be fooled into thinking that the absence of appeals means everyone is happy. Where the VOA says a case is resolved it merely means they have made their decision, so some of those may progress to the appeal stage.

The figures generally show that the system is slow and cumbersome, and businesses are finding it very difficult to come to terms with the registration process. We would expect the number of challenges to be lower than in 2010 because that’s the whole purpose of the change, but the problem is that a lot of people who have genuine cases are being deterred from pursuing them and may be paying thousands of pounds more than they should.

The introduction of penalties for providing false information is yet another deterrent, but it will not put off the sort of consultants that the Earl of Lytton was talking about and that presents further problems for ratepayers.

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