Challenging a rateable value
THE PROBLEM
You are the operator of the Alpha hotel. You have been working hard and business begins to build as hoped. But a short distance from your hotel a new hotel opens, the Beta. With this comes increased competition, both for yourself and for other operators in the area. This is a typical example of what is known as a material change in circumstances (MCC).
Over a period of time it is evident that the Alpha hotel begins to lose bookings and associated business to the Beta hotel. Although you are an experienced hotelier and offer imaginative incentives and promotions to attract guests back, it is not sufficient to return trade back to its pre-Beta hotel levels.
It is clear that business will continue at the lower level of turnover for the foreseeable future.
THE LAW
Where business is affected by new competition, appeals can be served to challenge the rateable value (RV) of the affected property. New competition, and any other physical factor affecting trade, is referred to as an MCC.
Any appeals on the grounds that an MCC has occurred must state the event and the date it occurred. Without this information such appeals can be deemed invalid by the Valuation Office Agency (VOA).
The VOA is the Government department (in fact, part of HM Revenue & Customs) on which all rating appeals are served and with which they are negotiated. The VOA is completely independent of your local council and is there solely to ensure that your RV is correct.
Appeals against a rating assessment can be served at any time during the life of the 2005 Rating List, with the proviso that MCCs can only be appealed sequentially. For example, had no appeal been served following the opening of the Beta hotel and then a second MCC occurred, no challenge could be made regarding the effect that the Beta hotel may have had on the Alpha hotel's trade.
In order to be successful in negotiations to reduce the RV you would have to demonstrate that you had lost business as a direct result of the Beta hotel starting to trade. Should agreement not be reached between yourself and the VOA, there is recourse to the Valuation Tribunal (a quasi-court) to have the matter resolved.
EXPERT ADVICE
With no specific time limit on when appeals to challenge the rating assessment must be served, it is now advisable to wait a reasonable period of time to assess the impact any MCC might have. It is not unknown for the arrival of a new business to help improve the turnover of existing operators. It is a natural instinct not to want to draw attention to this fact, in case the RV is increased.
It is the valuation officer's duty to maintain the Rating List correctly at all times. One must accept that, where the RV of a property should be increased, it is more likely to happen when the relevant facts are brought to the valuation officer's attention - possibly when a rating appeal is being discussed.
It is conceivable that the valuation officer may have underestimated the rating assessment of your property and would wish to rectify this once the full facts are known. It is vital, therefore, that the RV of a hereditament is reviewed before any appeal is served on the VOA, whether due to an MCC, or against the RV with effect from
1 April 2005 (the beginning of the 2005 Rating List).
CHECK LIST
- Note the effective date of the relevant MCC.
- Track the effect that the MCC has on your business.
- Review the rateable value before serving any appeals.
- Ensure that any proposals to challenge the rating assessment state the event and the date it occurred.
- Be able to show evidence of the effect of the MCC on your business.
BEWARE!
While appeals against the 2005 rateable value can be served at any time in the 2005 Rating List (to 31 March 2010), only one appeal resulting from any MCC, or against the rating assessment of a property at 1 April 2005, can be served. Do not, therefore, "waste" any appeal.
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