That is not the question you should be asking yourself, according to Colin Whelan, head of rating at Johson Fellows. More importantly, this is the question you should be asking your business rates advisor.
People, along with the Valuation Office (VO), the government body who set and maintain the rating list, believe ratepayers should be able to contact the VO if they believe their assessment is wrong and they will rectify it. Easy. However, there can be pitfalls in doing this without professional advice.
“There’s a misconception that because rates are a tax on the right to occupy a business premises, they can’t be appealed. But they have been successfully appealed for thousands of properties for many years,” says Whelan.
There are lots of reasons why ratepayers think their rates are wrong, and many appeals are producing savings to the ratepayer and peace of mind that they aren’t being over charged.
In simple terms, business rates are charged on commercial properties and are calculated by multiplying the rateable value (RV) by the relevant uniform business rate (UBR), currently set at 42.6p in the pound.
The main reasons for appealing the RV placed upon your property are:
1. Your rent is lower than your RV
2. You believe your floor areas are lower than the VO’s valutation
3. You have works to the building or vicinity that is causing distress and may affect the potential rental value of your property
4. Rental evidence in the vicinity indicates the VO has got its figures wrong.
However, Whelan says business owners should remember that rates can go up as well as down. “Many properties have not been inspected for a number of years, or never in some cases, and there could be factors that could actually increase your RV: floor areas being larger; extensions being built; improvements including heating and air-conditioning. I would always recommend seeking advice before contacting the VO.”
What the majority of rates payers don’t realize, says Whelan, is that if you improve you pay.
“We have to presume the property is vacant and to let and value as it stands,” he says. “So business owners who put in heating, so that their workers don’t freeze in their factories, pay. Businesses that put in air-conditioning, to make their executives more comfortable whilst sitting at their desks, will pay. Businesses that build a nice little store to the rear of their property, so their stock doesn’t get ruined by the elements, will pay. This seems very unfair, especially as most improvements are ignored in the rent.
The VO talks of maintaining a fair and reasonable rating list, but what’s fair about penalising businesses that want to improve their working environment?” That’s the hypothetical world of rating in a very real world of ever increasing costs.