Central London business rates to rise 40%
Following the government's revaluation of rates for the next five years published today, which will see companies in prime central London areas facing bigger-than-expected business rate increases, averaging almost 40 per cent, James Batham, partner at international law firm Eversheds comments:
“Questions will be asked as to why, when retail in particular is under threat in the present climate, this additional burden is being placed upon businesses. The effect may be to further threaten jobs and economic growth.
“Controversially, for the 2010 list, the government has based rateable values on rental values in the more favourable April 2008 market and initially set the appropriate business rate (UBR) at 5%, based on a 17-year "spike" in inflation in September 2008. The sense of injustice may have been calmed by the chancellor's statement on 31 March that the rise in the UBR would be only 2%, but the good news was limited. Alistair Darling will claw back the lost 3% by "smoothing" the remaining 3% over the coming couple of years. Accordingly, the pain is likely to be delayed at best to when businesses may still be struggling with costs."
"However, businesses need to be aware that the calculation of business rates liability is not straightforward, nor an exact science. Different properties require different means of valuation in order to reach a hypothetical opinion of a value given by the Valuation Agency (VA). Ratepayers are therefore entitled to challenge their ratings ability and can do so on various technical grounds.
“Ratepayers should endeavour to relieve the burden of business rates that weigh upon them by closely reviewing their current and future liability. It is advisable to engage now with the VA to prevent “rate rage” and to ensure that rating liabilities are as low as possible, with a view to avoiding the need for lengthy appeals. However, where an appeal becomes becessary, we are finding that large reductions are still being achieved.”
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