The Valuation Office Agency today publishes online the new 2010 Rateable Value (RV) assessments of property values used in the calculation of business rates payable by all 1.8 million businesses in England and Wales. But Gerald Eve the UK's largest business rates adviser has warned that this will merely create confusion as businesses will still not know what they will actually have to pay from next April.
The starting point for rates bills is to multiply the RV by an amount which is set by the government each year known as the Uniform Business Rate (UBR). In most years the UBR moves in line with the Retail Price Index (RPI) but in a revaluation year it is rebased so that the rates take from businesses remains constant in real terms.
Jerry Schurder head of business rates at Gerald Eve said: "Despite the best efforts of the VOA in publishing the new values and its media campaigns to prepare businesses for the summary valuations that will be posted over coming weeks, many businesses mistakenly assume that the RV or summary valuation is what they have to pay in business rates.
"This is a classic example of a failure of joined up thinking from the Government. The new 2010 RV is meaningless to businesses unless it is accompanied by other information which contributes to the calculation of their rates liability. In order for businesses to calculate their bills companies need to know what the Uniform Business Rate will be and also September's retail price index. These will not be known for a fortnight. However, the biggest remaining mystery is how the Government will phase in increases and decreases in bills because as yet it has not confirmed its plans for transitional relief."
Schurder explained that last week the Government closed a public consultation exercise on transitional relief. He doesn't expect a final Government decision until mid- November at the earliest.
Schurder points out that the VOA website includes a link to a rates calculator which estimates what businesses' bills could be in 2010. It builds into its formula an assumption regarding transitional relief based on the Government's preferred option in its consultation paper.
Schurder adds: "This means either that the consultation process is a sham because the Government decided on the details before consulting, or the rates calculator is meaningless and misleading.
"What is the point in providing a rates calculator with the warning 'You must not rely on the information provided by this indicator. Your exact liability can only be provided by your local authority when it sends your rates bill' in other words you'll have to wait until March to find out what you will be paying in April."
In its July consultation on transitional relief, the Government revealed high level data showing that RVs were likely to increase by an average of 19%. But once the new assessments are published this average is expected to mask significant variations.
Schurder said: "London faces the biggest increases, with some offices in inner London doubling, whereas the Midlands should benefit from the revaluation. The struggling manufacturing sector should benefit from reduced rates bills but if retailers were hoping that the revaluation would bring some cost relief they are likely to be disappointed."
Schurder does however have praise for the VOA's refreshed website (www.voa.gov.uk/2010 - which goes live late on 30 September) which he is says is much more user friendly and allows property occupiers to compare their valuations against similar properties.
Source: Brown Lloyd James Financial