Malcolm Scott Consultants, in conjunction with parent company Harris Lamb, is working with a number of UK garden centres to protect them from "unfair" business rates charges and ensure they are well equipped to appeal against them as the 2017 Rating list is announced.
Nigel Fletcher, of Harris Lamb’s Rating team, said that since acquiring the planning consultancy in May this year, the team had been working to offer guidance and support to the garden centre trade with a view to reducing their business rates.
The Non-Domestic Rating appeal system is currently undergoing a period of consultation, with the resulting changes likely to be the biggest shake-up for 26 years. The Government's Valuation Office Agency (VOA) is due to release the draft 2017 rating list on 30 September with the List becoming live on 1 April 2017, and Harris Lamb will be spending the coming months working with existing and new clients from within the horticultural sector to ensure they are fully armed with the knowledge and expertise required to ensure they can reduce rates and lodge appeals where required.
The Government’s proposed changes to the appeal process for the forthcoming 2017 national rating revaluation will be a three stage process called ‘Check, Challenge, Appeal’.
Check – whereby facts concerning a property must be agreed between the Valuation Office and the ratepayer,
Challenge – the period during which the majority of appeals will be resolved, according to the Government, and finally,
Appeal – whereupon any involved parties will focus on outstanding material issues.
Fletcher said: "The Government intends to charge a fee for the appeal stage, which will be up to £150 for small businesses and £300 for other businesses – the fee will only be refunded if the appeal is successful. Furthermore, the proposals state that, when considering an appeal, the Valuation Tribunal for England (VTE) should order a change in the Rateable Value only where its view is that the valuation is ‘outside the bounds of reasonable professional judgement’.
"These new processes have the potential of being grossly unfair to the ratepayer, and could cost businesses many thousands of pounds over the life of the 2017 rating list if the rateable value is excessively high but still within what the Government considers to be inside the ‘bounds of reasonable judgement’. Current indications suggest incorrect rateable values may not be amended for at least 18 months, with ratepayers expected to continue to pay the original rates liability until such time as any challenge to the rateable value is concluded, and adjustments or refunds issued where appropriate."
He added: "There are many considerations to take into account when examining a centre’s rateable value, and the key is to plan in advance. Current indications for the forthcoming 2017 rating revaluation suggest the Valuation Officer is taking into account a number of factors influencing the garden centre market. These include the reduction in home ownership, new houses having smaller gardens, and garden centre diversification into non-horticultural sales such as clothing and furniture. There has also been an increase of concessions within garden centres, with high street retailers seeking to benefit from the footfall."
When valuing garden centres for rating purposes, the Valuation Officer applies an appropriate scale of value (£/sqm) which is derived from rental evidence, and applied to the centres accommodation. Further reference can be taken by analysing gross turnover (excl VAT). When appraising the accuracy of the rateable value, the first line of investigation is to check the VOA’s survey details and the basis of valuation applied to a property. In addition, there are opportunities to seek reductions in rates liabilities where garden centres are undergoing alteration works by way of a ‘Material Changes in Circumstance’ (MCC) appeal. MCC’s can also be sought if works (eg Roadworks) nearby the subject property have a significant effect on trade. Newly constructed garden centres should also be reviewed during the period of works, to ensure the Valuation Officer does not seek to assess the property prematurely.
To illustrate the rates liability incurred on a garden centre, a rateable value of £100,000 would result in a charge of £49,700 for the current rate year (2016/17). This clearly represents a significant annual charge. Fletcher said: "We understand the Government considers garden centres to have managed the economic recession better than many commercial properties, with large garden centres faring better than the lower end of the sector. This suggests larger garden centres (rateable values perhaps exceeding £75,000) may experience larger than average increases in rates charges.
"Along with our MSC colleagues we will be able to offer clients across the sector the best advice and support throughout the complicated consultation process and hope to see a resulting reduction in overall business rates for them."
Harris Lamb charges are calculated on a performance related basis, ensuring the exercise is self-financing. Fees are set at a mutually agreed level, and documented in accordance with the guidelines set by the Royal Institute of Chartered Surveyors (RICS).