Fundamental Review of Business Rates in England
Uniform Business Rate (UBR) has been frozen for one year.
In submissions to the Treasury’s review of business rates the Government has been asked to implement the following key measures for the 2021/22 rate year:
- Reduce the UBR by 50%
- Continue to expand the ‘rates holiday’
- Remove downwards transitional phasing for all properties that are still impacted by the transitional scheme
Hopefully freezing UBRs is not the last word from the Chancellor on business rates measures for the forthcoming year and that he will go further in his Budget on 3rd March.
Whilst it had been expected that he would also take that opportunity to announce the outcome of the Fundamental Review, it now seems likely that this will be delayed ‘until the Spring’ which is Government speak for sometime between April and July.
A key recent announcement was that the Scottish Budget plans a three-month extension to 100% Retail, Hospitality, Leisure and Aviation relief from April to June 2021-22.
This has been funded from the returned relief already received from some supermarket operators and other larger retailers. The announcement also included a note that should the UK Government bring forward an extension to their equivalent relief scheme which generates consequential funding for Scotland, Ministers are committed to matching the extension period as part of a tailored package of business support measures. This is a clear challenge to the Chancellor and HM Treasury to listen to the growing demands to continue the rates holiday into next year for ratepayers with limited prospects of being able to operate their businesses in a normal way for some time.
In a follow up message to stakeholders issued over the weekend the Scottish Government have advised the following change to the administration of the RHL scheme:
‘To ensure that this relief only goes to those businesses who require it, we plan to make it application-based in 2021-22. This will be set out in forthcoming subordinate legislation and associated annual non-statutory rates relief guidance.’
Whilst we would agree that it is appropriate to ensure that the relief is not going to essential retailers who have been able to trade well through the pandemic, it seems unnecessarily burdensome to put the onus on ratepayers to apply for the relief – as well as likely to create delay and confusion.
Covid Material Changes of Circumstance (MCC) appeals
In our earlier update we considered the potential for arguing that there are sufficient grounds to pursue MCC challenges in respect of properties that have been impacted by Covid-19 and in particular those that have not benefited from the relief available to occupiers such as hotels.
The first stage of this process in England requires a formal “Check” to be made confirming the physical facts of the property and identifying the relevant Covid MCC effect, followed by a formal Challenge identifying the reduction sought and the justification for it.
There have discussions with the Valuation Office Agency in England and Wales and separately with the Scottish Assessors Association in an effort to reach agreement in principle for the different categories of properties affected, thus potentially avoiding the need to negotiate each property individually.
Government figures released last week revealed that some 281,690 “checks” have been made in England since April as firms have battled the effects of COVID-19 and have sought to reduce their rates assessments.
Those in the retail, leisure and hospitality sector who have benefitted from the rates holiday have not needed to challenge their RVs thus far but unless the holiday is extended a tsunami of additional appeals will be created by businesses in these sectors.
Local Restriction Support Grants have been introduced to assist businesses impacted by the introduction of Tiered closures or part lockdowns. Whilst not directly a business rates matter these grants are administered by Local Authorities and awarded according to criteria based on rateable value.
Following the national lockdown introduced from 5th January 2021 the Government in England introduced the ‘Local Restrictions Support Grant (Closed) Addendum: 5 January onwards’ and the ‘Closed Businesses Lockdown Payment’. The Scottish and Welsh Governments have since announced similar schemes.
Links to guidance on the respective schemes are detailed here:
Wales Delays Changes to the Empty Rate Regulations
Earlier this month The Welsh Government published a summary of responses to their recent consultation on the draft Non-Domestic Rating (Unoccupied Property) (Wales) (Amendment) Regulations. These would have brought into effect the proposed change that will require properties to be occupied for a period of six months (instead of the current 42 days) before an owner can claim a further period of empty property rates relief once the property is vacated, after the initial period of three or six months.
The consultation closed on 12 November and many responses referred to the continuing economic circumstances and potential changes in the property markets resulting from Covid-19. It has therefore been agreed that the regulations will be laid with a commencement date of 1 April 2022 rather than April 2021. This is intended to allow billing authorities, businesses and other ratepayers time to prepare for the changes to unoccupied property relief.