Business Rates

Business Rates are confusing at the best of times, particularly for those in the leisure sector having to navigate through the complex relief system, but following last year’s Non-Domestic Rating Act, they are going to become more onerous in the future.

Among other things introduced by the new Act, such as 3 yearly revaluations, the ability for Councils to issue Completion Notices on properties which have been exempt from rates whilst being refurbished and 12 months’ relief on certain improvements made to a property, one of the biggest steps towards self-assessment for Business Rates is the introduction of the ‘Duty to Notify’.

In simple terms, all ratepayers must notify the Valuation Office Agency (VOA) of who they are (i.e. the correct entity name), what properties they are responsible for and ‘information relevant to valuation’. The latter is loosely defined as information which would or might affect the existence, extent or rateable value of a property.

We are likely to receive more detailed guidance in the future, but these new regulations will force ratepayers to highlight properties which are not assessed for rates, but more onerously it will require them to notify the VOA of any change made to a property which could affect its rateable value within 60 days of the change being completed. This would potentially include anything from a review of the passing rent to a structural extension.

This would then be reiterated in an annual declaration that everyone will have to make to confirm the changes already notified, or just to confirm that there haven’t been any changes.

What we haven’t been told is how anyone can notify the VOA. In fact, the VOA themselves don’t know how this will happen and are working to find a system or a mechanism through which this can be done. It may be an extension of the Government Gateway, but no one appears to know at present.

Despite there being no mechanism to fulfil the ‘Duty to Notify’, the legislation does set out what the penalties for non-compliance will be. If you fail to comply, you can face a fine of 2% of your rateable value up to a maximum of £900. However, if you provide false information, knowingly or by mistake, you could face a fine of 3% of your rateable value plus £500, or in extreme cases, 3 months in prison.

It begs the question as to whether it may be more prudent, where there is uncertainty about the relevant information, not to comply and face the lower fine, rather than innocently provide the wrong information and be hit with a higher penalty.

While there is likely to be a steep learning curve ahead of us, along with teething problems of a new notification system, it is crucial that you understand how these new changes impact your property.