Property Directors Forum Rating Revaluation How best to navigate the forthcoming changes. Ian Tanner Tanner Rose LLP 24 th November 2016

Transcription

1 Property Directors Forum 2017 Rating Revaluation How best to navigate the forthcoming changes Ian Tanner Tanner Rose LLP 24 th November 2016

2 RATING NEWS HEADLINES London companies to bear brunt of business rates overhaul Appeal proposals are barrier to justice Capitals politicians join forces to fight massive business rates increase Outrage over sharp rise In business rates Action needed on antiquated business rates

3 28 bn. reasons why business rates will not go away

4 Philip Hammonds View - What is to like about Business Rates Simple methodology Tax on rental value Easy target all business property Long established precedent Easy to collect 28 bn tax take Automatic RPI increases Self adjusting mechanism to protect yield

5 Philip Hammonds View - What is not to like about Business Rates Appeals Cost of appeal management Appeals over 1 million appeals registered against 2010 assessments Appeals over 200,000 appeals outstanding Rateable Value shrinkage (RV Loss) Revaluations costly exercise Ratepayer Agents

6 Property Directors View - What is to like about Business Rates Not much.. Predictable (mostly) Capable of appeal (eventually) Payable over 10/12 months (usually)

7 Property Directors View - What is not to like about Business Rates Tax Rate too high Appeals take too long Annual RPI increases even CPI would be better Complicated basis of charge supplements Lack of transparency on rates valuations Infrequent Revaluations Only paid by bricks and mortar businesses

8 What are Governments plans for Business Rates Retain it Protect it minimise shrinkage Make the appeals process more difficult Close loopholes anti avoidance Localism

9 Localism Likely outcomes by 2020 Local Authorities will be permitted to decrease or increase business rates within their area. Mayoral Authorities and possibly Local Enterprise Partnerships will be able to levy a supplementary rate like Crossrail in London Local Business Improvement Districts will be encouraged Lots of minor incentives impacting rates bills eg Employment of local workforce Development skills and apprenticeships Encouragement of Green policies Net Result almost certainly increased cost for businesses

10 2017 Revaluation Winners and Losers Increases Central London Utilities (Central List) Prime Retail Distribution Retail Warehouses Decreases Everywhere apart from Central London Secondary Retail Factories/Warehouses

11 2017 Revaluation Geographical changes The 2017 Business Rate Revaluation Table 1: Estimated percentage change in bills at 2017 revaluation REGION CENTRAL RETAIL OFFICES INDUSTRY OTHER TOTAL North East -16% -21% -9% -1% -11% Yorkshire & Humber -11% -21% -9% -4% -10% North West -15% -14% -12% 0% -10% West Midlands -11% -16% -7% 1% -7% East Midlands -5% -2% -7% 3% -3% East -13% -7% -7% 2% -6% South West -14% -10% -5% 1% -6% South East -8% -3% -4% 6% -2% London 14% 10% 4% 14% 11% Central list 28% 28% TOTAL 28% -5% 1% -6% 5% 0%

12 Rates Transition Rates transition is meant to smooth in large increases or decreases in rates charges following the Revaluation Regulations require there to be a transition scheme. Self Financing Central London is to finance reductions elsewhere Northern Powerhouse conundrum The Government have decided on Option 2 from their Consultation Paper 45% maximum increase in 17/18* 4.1% maximum decrease in 17/18* * For assessments in excess of RV 100,000

13 2017 Revaluation Utilities 2010 m 2017 m % British Telecom Network Rail London Underground Retailers 2010 m 2017 m % Harrods Selfridges Bond Street Oxford Street Trafford Centre, Manchester No change Intu Centre, Newcastle -15

14 2017 Revaluation - Impact Offices % Change City of London 25 to 35 Westminster -10 to 10 Canary Wharf 10 Kings Cross 60 Reading 80 Birmingham -10 Manchester -15

15 2017 Revaluation - Impact Warehouse/Distribution % Change London Gateway No change Magna Park, Lutterworth 10 Accolade Park, Bristol 10

16 2017 Revaluation Immediate Actions Review Budgets reflecting transitional scheme Check Facts are floor areas and descriptions correct Incorrect Valuations raise with Valuation Officer Trade or Organisation reviews Consider appeal/negotiation strategy post April 2017

17 2017 Revaluation Appeals New 3 stage appeal system effective 1 st April 2017 which the Government insists will be a marked improvement but for whom? Check - Facts - Rent, Floor Areas etc Challenge - Why assessment is wrong Appeal - Cost of appeal direct to Valuation Tribunal Proposal to only allow appeals if the decision is outside the bounds of Reasonable Professional Judgement whatever that is.

18 Rates Planning and Mitigation More holistic approach is becoming the norm. This will include Empty rates management Part occupied relief Portfolio Management Appeals management and strategy Rates payment Historic audits Outsourcing and procurement

19 2017 Revaluation Role of Consultant Be counter cultural the more the Government and the VO make it difficult to deal with rates the more innovative and creative you need to be. Objective is to work round the system with less focus on appeals Transparency be open. The system will force out the facts. Offer them up front with suitable caveats where necessary Seek to do the Valuation Officer s job for them As the Valuation Officer is putting up barriers seek to break them down by consensus Apply a less adversarial strategy Go the extra mile with the client, with the VO and with the issue.

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