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Richard Farr, Partner at Sanderson Weatherall advises North East businesses about how they can prepare for the change in business rates coming into effect next year.

From 1 October 2009, the Valuation Office Agency (VOA) will release the drafted 2010 Business Rates Revaluation. This will directly affect business rates 2010/2011 bills and for some, will herald unwelcomed news for North East firms.
 
Every five years, all non-domestic properties are reviewed and assigned new values but this time around, we are likely to see a significant impact for some businesses given the way the calculations are made.
 
Since 1990, the rateable value on commercial property has been calculated based on historic rental values and in this instance, the rates for 2010 are based on the high property market values of April 2008. This system is supposed to help maintain fairness by ensuring that rateable values are based on up-to-date information – but at a time when the current property market has changed so dramatically in just 18 months, can the Government argue that it is really fair?
 
Regionally across the UK, we are told to expect that only London and the South West will see a rise in rates across all types of non-domestic properties. Here in the North East, ‘bulk’ properties such as offices and industrial buildings may see a reduction in payments next year, retail should remain stable but it’s the ‘non-bulk’ sector, the colleges, universities, leisure centres and local authority amenities who’s rates may increase.
 
As with previous rating lists, the Government has announced that Transitional Phasing will once again come into effect to cushion the immediate impact of large increases in rates, by placing a ceiling on large increases and a floor on significant rate reductions.
However, there is a twist to the tail. Roll out of this type of system is extremely difficult with a huge potential for error, even if businesses have advanced warning to factor this into their financial planning. As the Government is still at the consultation stage where four different options are being considered, we are going see the 2010 published rates list long before a decision is made on phasing - making financial planning impossible.
 
Many would argue that this is the most contentious revaluation to-date and perhaps the most difficult to deal with.
It’s fair to say that the Valuation Office recognise this, but this is the system we are stuck with, so what can businesses do to ensure they are best-prepared to face the changes...
 
Put your house in order. Businesses can’t start the formal appeal process against the new rateable values until after 1 April 2010. However, if your property has undergone physical changes such as the demolition of an area or a change in occupation which results in a clear error, upon proof of this the valuation office will revise the rateable value.
 
It’s never too late to appeal. Up until the 21 March 2010, you can still appeal against the value set from the 2005 rating list. It’s important for businesses to ensure that their rates are as low as possible to come from a stronger position if an increase kicks in.
 
Get the right advice. Unfortunately, there are a number of unqualified rating advisers or ‘rates cowboys’.  Always make sure you speak to a chartered surveyor who is dealing with your case rather than an intermediary and be suspicious of anyone charging an upfront fee in exchange for sometimes worthless advice.  Always check that advisers comply with the Rating Consultancy Code of Practice.
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