From April 2017, the business rates revaluation will result in thousands of business seeing a change in the rateable values of their properties, and the leisure sector will be significantly affected. Tim Dyson, business rates expert, discusses the changes and how they could impact owners of leisure properties in the North East.
Unlike many property sectors in the North East, leisure has performed reasonably well in recent years, and this may be a key factor in the calculation of rateable values. As these are based on values from two years ago, much could have changed in prior years or since then, and itis therefore essential that these are as accurate as possible – this may mean amending the facts or dismissing estimates.
Pubs and licensed premises are subject to specific criteria, including the type of premises, location and the services offered, to establish fair maintainable trade, with the rateable value calculated according to rents paid for similar pubis, although for data protection purposes this information is not public. All of this understandably means that values can vary greatly between establishments.
For businesses that feel their prospective rateable values are too high, there is an option to contest the figure, but this is effectively a one-shot opportunity. If values were based on a particularly profitable year and are not a true reflection, the Valuation Office has launched the Check, Challenge, Appeal function to resolve this.
However, this process places a strong emphasis on appeals being well founded and supported by evidence, making them more forensic from the outset. While it may be tempting to conduct this research yourself, the scarcity of information, length of the process and stringency applied will mean all but the most convincing, well-rounded cases are dismissed.
If businesses cannot provide evidence of fair, maintainable trade by a competent operator – excluding external factors and promotions – the Valuation Office is unlikely to concede a reduction. Expert advice and approaches must be taken, or an unavoidable rates increase may be enacted.
To help businesses facing significant rate rises after the seven-year gap between revaluations, a transitional process is in place to stagger the increases and cap any yearly hikes. However, this cap has risen considerably from previous revaluations in the first couple of years. A reduced current RV may have a knock-on effect on saving.
With businesses having until March 31 to appeal, time is of the essence, and with thousands of pubs, clubs and restaurants set to be affected, the DIY approach may not be best if a sting in the tail is to be avoided.