How will revaluation affect garden centres' business rates?

Retail industry continuing to protest against Government's changes to system.

Quinton Smith: points out rate will vary considerably
Quinton Smith: points out rate will vary considerably

The revaluation of businesses will have a varying impact on garden centres with larger retailers paying considerably more. The bigger centres could see an increase of up to 50% in the base figure of their main building following the revaluation in April.

A base figure is the rate a business has to pay per square metre per building on the property. If the main building is re-rated, subsequent buildings such as canopies will also have to pay a percentage of that rate.

Allen Evans, partner and valuations expert at Gilbert Evans, says: "The majority of garden centres will be affected by the revaluation and there is no pattern in terms of increase. Based on our research the average rate of increase is between 10 and 15%, but the rateable value can be increased up to 50%."

Simon Quinton Smith, director of property expert Quinton Edwards, adds: "The rate that garden centres are hit will vary considerably. Based on the sample I currently have, two of the bigger garden centres have an increased rate of 36%."

But Evans points out that they have also seen reductions, particularly in smaller garden centres with a rateable value below £51,000. One garden centre's rate reduced by as much as 13%.

Quinton Smith says: "This time they have put in place a penalty if you appeal your bill and fail. Garden retailers shouldn't need to worry if they use the right rate surveyor who understands the business." The penalty fee being introduced could cost up to £500 should the appeal fail. Smith says this is less of a problem for bigger garden centres but is a substantial amount for smaller retailers.

There is a widespread protest throughout the retail industry as a whole, with 13 employer groups including the British Retail Consortium (BRC), Federation of Small Businesses, Revo, Association of Convenience Stores and British Property Federation uniting to condemn the Government's "outrageous" changes. Quinton Smith says the re-rates are so high in some areas, such as Suffolk, that the Government is considering backtracking. Although he is receiving many rates enquiries from garden centres, he will only charge a business if its appeal is successful following a re-rating.

The next business rates revaluation comes into effect on 1 April but the lobby groups say tens of thousands of firms still face uncertainty over bills and they want easy access to appeals against "inaccurate" bills that could up to 15% out.

BRC chief executive Helen Dickinson says plans for the new appeals process would mean that a business rates valuation determined to be inaccurate by the independent Valuation Tribunal for England would only be corrected if it is deemed "outside the bounds of reasonable professional judgement".

"This would be unfair to ratepayers and create additional uncertainty for local government," she says. "A collaborative working relationship between the Valuation Office Agency and ratepayers, where information and evidence can be shared and appeals avoided, should be sought." The last time properties were valued, in 2010, almost half of businesses appealed against their bills.

Figures - Rates multiplier and relief

For a property in England that has a rateable value of up to £51,000 the rates multiplier is £0.466. For a property with a rateable value higher than £51,000 the multiplier is £0.479.

Transitional relief arrangements have not been confirmed but are expected to cap first-year increases for properties with a rateable value below £51,000 to 12.5% plus RPI. For those higher than £51,000 it will be 42% plus RPI.

There will be transitional relief where the liabilities reduce where the maximum reductions in year one will be capped to 10% less RPI (rateable value more than £51,000) and 4.1% less RPI (rateable value less than £51,000).

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