Valuation Office Agency must face the challenge of rates checks

Despite some valid criticisms of and difficulties with the new appeal regulations for business rates, a total of 100,740 non-domestic properties in England – including shops, offices, pubs and public sector buildings – had started the process of a formal appeal by the end of the second quarter of this year. That number is historically low, although it was pleasing to see that the volume of both registered and settled checks – the first stage of a formal appeal under the ‘check, challenge, appeal’ process – rose in the quarter ending 30 June compared with the previous three months. But although there is an increase in the number of appeals being resolved at the ‘check’ stage, many disputed valuations proceed to ‘challenge’, and this is where the Valuation Office Agency must now focus its attention on the speed of response and the resources being deployed. Worryingly, the number of outstanding ‘challenges’ is increasing, with reducing confidence that they will be resolved before approaching the deadline for ‘appeal’. The number of outstanding ‘challenges’ has risen by nearly a third during the last quarter alone, from 6,980 at the end of March to 9,260 as of 30 June. Many ‘checks’ are seemingly being shuffled to ‘challenge’ unnecessarily, which is exactly what the ‘check’ stage was put in place to avoid. Few experienced caseworkers Given that the numbers are still relatively low, one of the primary reasons for this bottleneck has to be a mix of too little experience at the ‘check’ stage – meaning too many unnecessarily progress to ‘challenge’ – and then a lack of enough experienced caseworkers allocated to deal with this increasing ‘challenge’ workload. All said, more resource is required to solve these unpopular delays. And there are further simple improvements that could be made. For instance, regarding the hospitality sector, the system maintains that the ‘check’ stage should only consider what is termed ‘correct property information’, but such a narrow view excludes, as an example, factual information relating to licensed properties where the level of trade is either factually incorrect or even estimated. Surely it makes more sense that such simple and obvious errors be considered and rectified at ‘check’ to quickly resolve them? There is also a common theme of buildings requiring a nominal value to be applied in the local rating list because redevelopment works are being carried out, and then being routinely rejected and needlessly taken into ‘challenge’ territory. ‘Check’ stage caseworkers often ignore or wrongly interpret submitted documents and reach conclusions which have already been overturned by the courts about the impact that works have on a property’s business rates position. A clogged system The VOA has had a heavy reduction in resource in recent years through successive spending reviews and now has the 2021 revaluation to finalise. What this means is its limited number of experienced valuers are overwhelmed and only the basic cases are being resolved at the ‘check’ stage. The new system was designed such that more work and evidence is required at the start of the process by the ratepayer and their advisers but, in return, the VOA committed to faster responses and settlement of well founded ‘challenges’ to circumvent unnecessary backlogs in the Valuation Tribunal. The system can work, but only if the VOA upholds its end of the bargain. If the pace does not increase then far too many unnecessary ‘appeals’ will, once again, clog up the independent Valuation Tribunal, which is exactly what the ‘check, challenge, appeal’ regulations were designed to circumvent. In turn, this will incur unnecessary delays and fees for ratepayers. The VOA is recruiting and training, which is good news, and I accept this takes time. But with volumes increasing and more than halfway through the 2017 Rating List, time is of the essence. More can be – and needs to be – done now. Alex Probyn is UK president of expert services at real estate adviser Altus Group.