CHECK, CHALLENGE, APPEAL REFORMING BUSINESS RATES APPEALS RESPONSE FROM COLLIERS INTERNATIONAL

Transcription

1 CHECK, CHALLENGE, APPEAL REFORMING BUSINESS RATES APPEALS RESPONSE FROM COLLIERS INTERNATIONAL 4 JANUARY 2016

2 CHECK, CHALLENGE, APPEAL REFORMING BUSINESS RATES APPEALS RESPONSE FROM COLLIERS INTERNATIONAL The Check, Challenge, Appeal (CCA) consultation document points to a system that would become more confrontational, more litigious and more costly. What the proposed changes will do is severely reduce the rights of ratepayers to challenge their assessments and their right to a fair hearing. R. v. Secretary of State for the Home Department, ex parte Jeyeanthan [2000] stated "procedural requirements are designed to further the interests of justice and any consequence which would achieve a result contrary to those interests should be treated with considerable reservation These proposals do not further the interests of justice or the interests of Ratepayers, they restrict it. It would be nice to think that these proposed changes were designed to help ratepayers but it is difficult to draw that conclusion. What appears clear is that the Government has created a situation that undermines the system. The consultation document along with the HM Treasury Review of Business Rates should be dealt with together. At Colliers International we call on the Government to take the following action to put confidence back into the system: A commitment to a regular revaluation at three yearly intervals. An increase in the funding of VOA offices and manpower to deal with the unacceptable time it takes to deal with appeals and to reduce the current backlog by 75% by the 12 month anniversary of the 2017 Rating List. Remove the VOA from pressure exerted by Local Authorities and H M Treasury so they can act independently. A register of those professionals dealing with rating appeals administered in the same way as the FCA to remove the cowboy operators from the system that prey on small businesses. Increased funding of VTE that increases the number of people that sit on panels and improves the training they receive. 2 of 12

3 Colliers International is a leading worldwide property consultancy and has one of the largest departments dealing with business rates issues advising clients throughout the UK. We have consulted with our clients and made representations through the Rating Surveyors Association in relation to this consultation document. Please find the responses across the following pages. Regards, John Webber Head of Rating Direct Mobile John.webber@colliers.com 3 of 12

4 RESPONSE FROM COLLIERS INTERNATIONAL We have set out responses to the questions below. Question 1: We would welcome views on the overall approach set out in this consultation paper. The onus is being placed on the ratepayer to fully justify their case. This language does not imply that the Valuation Office Agency (VOA) will be providing full information to enable ratepayers to determine whether a challenge is required in the first place. We should ask that clearer information includes reference to rents used to support the basis of assessment and evidence given less weight and the reasons why. The ability of the system to reduce the number of appeals will depend on the VOA competence and the restrictive nature of the regulations. While the preamble discusses the desire to enable ratepayers to pay the right amount more quickly, the proposals appear to be to make the system more difficult to use in the hope that more people will be deterred from appealing. Check, Challenge, Appeal appears to turn the current single challenge system into a three challenge system. we will be considering further the stage at which relevant authorities (i.e. billing authorities where they are not participating as ratepayers or owners) should participate. Billing Authorities (BAs) and the VOA should be required to submit the same level of detail and operate under the same restrictions as a ratepayer would under these proposals. Question 2: What are your views on when relevant authorities should be involved in the process? Local Authorities (LAs) are already involved in the process but they currently operate in the shadows with little statutory authority they are employing private agents to find rateable value missed by the VOA as well as seeking to question the value placed on hereditaments by the VOA. If we are to return to a pre-1990 situation of a tripartite arrangement then LAs should be forced out of the shadows so ratepayers can clearly see their intentions. This should make them more accountable politically. It is essential that ratepayers are fully aware of what information is being put forward on their behalf by any professional representatives they engage, and we are considering how this could be facilitated by the 4 of 12

5 Valuation Office Agency, for example, by copying correspondence to the ratepayer or requiring the ratepayer to actively endorse the material put forward at challenge stage. This appears to be the introduction of additional red tape that will adversely affect occupiers of large portfolios. Question 3: We will consult further on the detail of these penalties, but in the meantime, would welcome general views on implementation and the likely disincentive effect of this measure. A system of FCA type self-regulation of rating advisors would remove the need for such sanctions. See our summary below. Question 4: We will bring forward end-of-list proposals in due course, but in the meantime would welcome general views. We propose that check stage may be entered at any time during the life of the list. However, given the changes from the previous system, we are considering further the arrangements which should apply at the end of the list. This appears to be a proposal to further reduce or restrict the right of a ratepayer to recover back-dated liabilities which is contrary to the stated purpose of these changes. The effect of such a restriction will be to increase the number of challenges submitted earlier in the revaluation cycle and reduce the VOA s ability to deal with challenges before the 12 month time limit. Question 5: What arrangements should apply to temporary material change of circumstances cases under the new system? At the moment the material date regulations state that the material date is the date of the proposal. As a result ratepayers are required to make appeals at an early stage. Often the evidence of the impact of the Material Change of Circumstance (MCC) upon the general turnover of properties affected and possibly from rental evidence will potentially not be available at the beginning of the challenge stage. As a result of the material date regulations there is no ability to take a reflective look as to whether to lodge a proposal. In fact, this provision acts as a catalyst to protective appeals being made. If the material date for MCC s were to be changed from date of appeal to date of event then this catalyst would be removed enabling a more reflective approach to making MCC appeals to be undertaken and ultimately potentially a significant reduction in the number of MCC proposals made. If the material date is amended as proposed then it is suggested that for MCC appeals in locations where multiple properties are affected these are 5 of 12

6 best considered together and that the VOA should have the ability to hold discussions in advance of the CCA process being initiated on individual properties. If such an arrangement is introduced this would mean that the CCA process would only then be required on those properties where it is agreed that an allowance is not appropriate or the matter is not agreed. It has been suggested that this procedure would be similar to the pre-filing type procedure operated in other areas by HMRC. The impact of the Court of Appeal s decision in Newbigin v Monk means that the effective date for temporary reductions due to alteration schemes (and even permanent deletions) is much more contentious. If the material day is determined by the date the check is submitted, it will only lead to the need to submit a subsequent check as material changes to the hereditament move on. It is obviously desirable to avoid multiple checks on essentially the same issue, which could arise where a hereditament is undergoing a series of physical alterations, not all of which may affect value. A sensible arrangement would involve acceptance that during the check stage the parties examine not merely the justification for an alteration but also its effective date. The material day should be determined by the effective date proposed in the challenge. Given that approach, it follows that it is essential that facts which emerge between the date of check and the date of challenge are accepted by the VOA, as these will be the material facts upon which a decision should be made, and may not have been known at the date of check. It is not appropriate to allow the VOA discretion as to whether to accept such factual evidence or to bar it. It is particularly inappropriate since such facts will be admitted on appeal to the Upper Tribunal, and the VOA s (and VTE s) refusal to allow such facts into consideration would be itself a legal issue justifying an appeal to the UT. Question 6: What are your views on the trigger point for check stage? It appears unreasonable to restrict a ratepayer to four months to challenge the VOA decision when the VOA has had up to 12 month to consider the case. Ratepayers and VOA should have same time limits if a limit is required at all. The current system already takes months (average) to process an appeal. Giving the VOA 12 months just to consider a correction of facts appears too long and should be reduced to 4-6 months. Question 7: What are your views on the time limit for submission of a complete challenge, following check stage? See above comments. 6 of 12

7 Question 8: What are your views on the trigger point for challenge stage? The substantive reasons for the challenge must set out why the ratepayer believes that the assessment is not correct.. The requirement for supporting evidence will not be met by an assertion, whether by the ratepayer or an expert, which is not further backed up by facts, analysis or legal argument as necessary. An explanation must be provided of how the alternative valuation has been arrived at and the evidence provided should support the alternative valuation. Providing this information upfront will minimise the time taken to deal with the challenge, and hence the costs to businesses. This proposal will add significant costs for businesses wishing to challenge their assessment and is aimed as a disincentive for businesses appealing. Question 9: Do you agree that these requirements for a challenge are the best way to ensure early engagement on the key issues? The VOA does not have a credible track record of applying discretionary powers consistently or fairly. For example they regularly refuse to alter the rating list when they have the power but the ratepayer does not have the right to challenge. The VOA will adopt a default position of refusing to allow new evidence to be considered which will prejudice the ratepayers rights. There should be a right to challenge a VOA s decision not to consider new information to remove the need for challenge through judicial review. The proposals are also silent of the level of information the VOA is required to release as part of the challenge process. This appears to give the VOA the power to determine timescales that should rest with a Tribunal or independent body. There should be no discretion on the part of the VOA to accept relevant further evidence. It is well established that all evidence is admissible (Garton v Hunter 1969). The VOA has a statutory duty to maintain a fair and accurate List and should take everything relevant on board. Not to do so would be prejudicial to the Ratepayer! If the VOA chooses to ignore new evidence / a change in argument, then it will just result in a new challenge being made. More challenges make for more work and not a reduction in time and effort as they aim to achieve If it is not possible to lodge more than one challenge against each of the grounds for appeal, as per current procedures, the above proposal would severely prejudice the rights of the ratepayer. The notion that the VOA will provide proportionate evidence to address the issues raised simply won t be followed through based on their current track record. They do not currently respond proportionately when provided with 7 of 12

8 evidence and argument during an appeal programming period so we cannot see this changing. We have seen before, when the VOA was required to provide a schedule of the underlying rents / comps in the 2005 List, that they would cherry-pick the evidence to support the valuation and the information would be incomplete (not showing rent frees / incentives). I believe their responses and eventual decision notice will become standardised and unsatisfactory to deal properly with the dispute properly; this occurs with many of their Statements of Case at the moment. This would not make for a fair and transparent system. Question 10: Do you agree that this process allows the ratepayers to make their case in a fair and effective way? Once the challenge stage has been completed, the Valuation Office Agency will not be able to reopen the case and will not undertake any discussions with ratepayers or their representative about the challenge. This is would be deliberately obstructive and restrict the possibility of settlement / resolution. The Valuation Tribunal for England will consider the Valuation Office Agency s decision in respect of the challenge, based on the evidence which was before it at that stage, and will decide whether the decision was correct. This appears to restrict the evidence considered by the tribunal. The decision of the tribunal should be the correctness of the RV not the correctness of the VOA s decision notice. Question 11: What are your views on whether straightforward appeals could be determined on the papers without the need for a hearing? We do not expect further discussion between the parties at appeal stage and are considering the feasibility of straightforward appeals being determined on the papers where a hearing is not necessary. Appeals should not be determined by written representation. If such a proposal is put forward it will just increase the resources, costs and time invested in the earlier stages of the process which will make the whole system inefficient. Ratepayers will have to approach every case as a potential appeal and submit their papers in more detail than may be necessary. Question 12: What are your views on the time limit for submission of an appeal, following challenge stage? This would be obstructive to the settlement of appeals. Discussions seeking to settle a dispute should be without prejudice and inadmissible at Court (Rush & Tompkins Ltd v Greater London Council and others). If everything 8 of 12

9 discussed with the VOA at Challenge stage is transmitted on to the appeal stage then this will discourage concessionary offers and is a clear disincentive for either party to offer any compromise (therefore increasing the number of unsettled cases). Question 13: How should we best ensure that the appeal stage focuses on outstanding issues and, as far as possible, is based on evidence previously considered at challenge stage? If a very short time was to elapse between challenge and appeal, there would be less objection to the suggestion that on appeal evidence is restricted; but since the time limits are very wide, serious injustice will be done by a bar on the admission of new evidence. During the interval between challenge and the appeal, there may be many settlements which show the development of a tone. Injustice and anomaly will result if the Valuation Tribunal for England (VTE) is prevented from considering such evidence, which could hardly fit within the suggested category of exceptional circumstances. The suggested stay for the introduction of new evidence is completely unnecessary and is a recipe for further delay. The parties simply need to be given the right of reply to any new evidence and two weeks should in most cases be ample. Question 14: We will consult further on the details of these fees, but in the meantime, would welcome general views on implementation. We propose to introduce fees for appeals, in line with the approach proposed for other tribunals such as the Tax Chamber. Fee levels could be flat rate, perhaps in the region of , which is in line with other tribunal fees, or could be linked to rateable value. Ratepayers would receive a refund if the appeal is successful. This will adversely affect small businesses and restrict their right to lay justice. They will be put off by the up-front cost. It will also legitimise cowboy agents who will use it as an excuse to charge ratepayers higher up-front fees without any service being provided. Question 15: We would welcome general views on whether changes to appeals to the Upper Tribunal (Lands Chamber) would be beneficial. We wish to explore how we can speed up the resolution of business rate appeals, for example by restricting the scope of onward appeals from the Valuation Tribunal for England to the Upper Tribunal (Lands Chamber) to points of law only, as in the First Tier Tribunal. This should not be implemented where the Valuation Tribunal (VT) decision is by a lay panel. If appeals to Upper Tribunal (UT) are restricted to points 9 of 12

10 of law then the VT should appoint professional panel members to hear cases. It is also likely to increase the amount of legal representation at VT, as ratepayers have an interest in recovering their appeal costs and have limited rights of further appeal. The idea of restricting the scope of onward appeals from the VTE to the UT (Lands Chamber) to points of law only would be prejudicial to the Ratepayer. As a VT is comprised of laypeople it is necessary to have the higher court to escalate matters if necessary. Furthermore, if the right to appeal on to UT is restricted it would make appeals to VT far more litigious in the first place and increase the likelihood of barristers at VT stage (thereby increasing costs). This, coupled with a fee to appeal to VT, could also result in parties seeking costs relating to the time they spend on a VT case. These reforms will give rise to a number of savings, in time, money and resources These reforms will increase costs for businesses and reduce their opportunities to achieve a fair and correct assessment of liability. Matters that are not specifically raised in the Consultation Document but require comment 1. Publication of Valuations The VOA does not publish Contractors Based (CB) or Receipts and Expenditure (R&E) or % of Fair Maintainable Trade (FMR) valuations. While there may be understandable reasons for withholding R&E and FMR valuations, there can be no reason to withhold CB valuations. This disadvantages the ratepayer (whether or not assessed on the CB) who is unable to see how comparable CB hereditaments have been valued. Why should a ratepayer or his agent have to submit a check in order to discover comparable CB valuations? And will a check prompt the VOA to disclose them? If not, then it will be necessary to challenge, and without knowledge of those CB valuations, the chance of success will be slim. The VTE currently has the ability to order the VOA to produce CB valuations (although it lacks powers to enforce such an order), but under the paper s proposals this would be new evidence which would not automatically be admissible. The remedy is clear: the VOA must publish all CB valuations. 2. Use of Forms of Returns (FOR s) in evidence Para 20 of the consultation document specifically states that the VOA will not provide rental information relating to other properties at the commencement of check stage. The paper does not set out the stage at which the VOA issues his notice setting out the rents on 10 of 12

11 which he relies. Presumably this will occur at the end of the challenge stage when (para 42) the VOA provides his decision notice which includes: c) the reasons for the decision, addressing all remaining disputed matters and indicating what evidence and arguments have been relied on in reaching the decision. This is too late for the appellant, if his evidence is to be limited to that put forward at the time of his challenge, because at that stage he will have been unaware of the VOA s rental evidence and will not have had the opportunity to require the VOA to produce rental evidence on other comparable hereditaments. If evidence is to be limited to that submitted at challenge, then the VOA has to disclose the rental evidence on which it relies at the end of check stage. 11 of 12

12 Colliers International 50 George Street London W1U 7GA All information, analysis and recommendations made for clients by Colliers International are made in good faith and represent Colliers International s professional judgement on the basis of information obtained from the client and elsewhere during the course of the assignment. However, since the achievement of recommendations, forecasts and valuations depends on factors outside Colliers International s control, no statement made by Colliers International may be deemed in any circumstances to be a representation, undertaking or warranty, and Colliers International cannot accept any liability should such statements prove to be inaccurate or based on incorrect premises. In particular, and without limiting the generality of the foregoing, any projections, financial and otherwise, in this report are intended only to illustrate particular points of argument and do not constitute forecasts of actual performance.