It’s your right to check, challenge and appeal your business rates bill and the case for SMEs is stronger than ever

For UK small and medium-sized enterprises, it is impossible to exert control over so many of the unprecedented and multiple areas of rising cost.

It’s your right to Check, Challenge and Appeal your business rates bill

From rising energy bills, spiralling inflation, or higher interest rates – and the litany of implications that is having, often the only survival strategy available to you is adapting as best as possible to ride the difficulties out. When it comes to business rates, however, proactivity is most certainly an option. 

In short: SMEs do not have to accept the bill they have been given. The ratepayer of a property has the right to challenge a business rates bill through an appeals process known as ‘Check, Challenge and Appeal’. Arguably, it has never been more crucial to scrutinise how a business rates bill has been calculated to ensure that bill is fair. 

This is not because SMEs are undergoing an unprecedented cost-of-doing-business crisis, although such a crisis does not help. In April 2023, the Valuation Office updated the rateable values of all business and domestic properties for the first time in six years, values which are highly subjective and lacking in an evidential basis. 

Challenges to the new rateable values will come from companies across the spectrum but especially so, we believe, from SMEs, for which there have been some hefty increases in rates for the premises from which they operate. 

Rateable values, which are the open market annual rental value a property could have been let for at a certain date, form the basis of the final bill an SME will receive. Although an increase in rateable values does not necessarily lead to a higher bill, it is important to have clarity over the rateable value that is being applied your sector. This is vital if businesses are to understand the assumptions behind the bill that comes through their doors. 

Hairdressers and beauty salons, for instance, have seen a 6.3% rise, farm shops an 11.1 % rise, convenience stores a 12.7 % increase in the latest revaluation. Meanwhile, vehicle and repair shops saw an incredible 26.1% rise and workshops a 32.1% increase.

Is your bill fair?

Fairness is one of the bedrocks underpinning the business rates system – a principle (and legal precedent, no less) restated most recently by the UK Supreme Court and it is arguable that the latest rates revaluation applied to some SME premises falls short of that idea.

A key thing to understand about rateable values is they are based on the estimate of the open market rent a property would achieve on a single date. This year’s revaluation date, known as the Antecedent Valuation Date, was April 1 2021, a moment in time when the commercial property market was in suspended animation due to a global pandemic. These were extraordinary times, when business-as-usual was a remote concept and when many SMEs were struggling to survive following a drop in GDP of 11% the previous year. 

It would be natural then, to think the business rate bill this year will be lower than expected but that is not necessarily the case. Despite the fact valuations have been estimated at the time of a global pandemic, Altus Group expects the government’s business rate income to increase across the UK, rising by 4.9% and this is notwithstanding the package of support that has been made available to help ratepayers. 

In this era of huge uncertainty, landlords struggled to collect rental income at all (let alone institute rent rises), while business turnover had been brutalised by national lockdowns. Meanwhile, the evidence that could have been gained from sales in the property market – another set of figures that helps calculate open market rents – was extremely weak given barely anything was bought or sold during that time. 

In that context, it is right to question the evidence of the rent that has been ascribed to a property at that time – and context, we believe, is paramount to the question of whether a rateable value is fair. In our view, there is limited data upon which to justify the numbers the government has arrived at and which has been used to form the basis of your business rates bill. In other words, the latest rateable values are highly subjective, and what is more, the most subjective set of rates ever compiled. 

To understand more about why, and find out what other grounds are available to appeal a business rate bill, visit: Challenge-business-rates.

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