By Matthew Midwinter, a chartered surveyor at property consultancy Sanderson Weatherall and the firm’s head of rating in the South of England.
Businesses across the South West are about to receive their new business rates bills and for many ratepayers yet another increase in outgoings will prove unpalatable, if not unacceptable. 
The anticipated rise of around 0.83% is not nearly as high as the expected 4% council tax rise planned for many households, but that is hardly likely to have business occupiers dancing in the streets!
This autumn businesses will find out the results of the Valuation Office Agency’s ongoing rating revaluation when new draft rateable values are published online.
New rates bills for 2016-17 include a ‘Lord Kitchener-style’ leaflet imaginatively entitled “Your draft rateable value is coming. You need to register now”. This means that now is the time for businesses to seek professional advice from a properly qualified rating surveyor, as individuals would contact an accountant when to completing their income tax self-assessment form.
Businesses that fail to appoint a professional adviser or neglect to register will only discover what their future charges amount to when they receive the next bill in April 2017. This might well come as a major shock to many companies.
However, it’s not all bad news for the regions businesses. With the valuation date moving forward seven years from April 2008 to April 2015, business rates should once again be more fairly based on the current rents that tenants actually pay to their landlords.
After all, the idea of a revaluation is not to increase business rates charged, rather it is to “reset the clock” to up-to-date values and thereby provide relief to those businesses whose property rents have clearly fallen due to the recent recession.
Typically on a revaluation, the total rateable value in the country increases, the rates poundage charged drops by the same amount and the total revenue collected remains the same.
In theory therefore this revaluation should remove the anomalies that were created when the Government surprisingly opted in 2012 to postpone the 2015 rating revaluation to 2017, rather than bringing it forward to 2013, which arguably would have been a much better idea.
There remain areas of Bristol and the South West where rental values for many types of property have not recovered to their pre-recession levels, particularly in the retail sector but also offices and industrial properties, and as a result those owners will enjoy newer, much lower rateable values.
Hard to believe? Well, there is one other factor to bear in mind, which is that on any new revaluation the Government typically introduces a transitional relief scheme to phase in value changes.
Perversely, this could result in large offices in the City of London having their expected sizeable increases in rates phased in over several years, in effect funded by businesses outside of London, which may have justifiably expected to receive big falls in their rates bills straightaway.
This will not be clarified until 2017, and is certainly something that South West businesses should be aware of.
The British Retail Consortium (BRC) has previously condemned business rates as a means of raising much-needed local authority revenues from high street shops. However, it is not just retailers, but all businesses and non-domestic properties that pay business rates. That includes offices, factories, car showrooms, pubs, fitness centres, hospitals, schools, power stations – the list goes on and on.
The true problem facing many high street shops is the inexorable growth of internet shopping. Whilst the coming rating revaluation should redress the balance on rateable values and reduce business rates for shops, internet sales will continue to increase. Whilst many online retailers, such as Amazon, pay considerable amounts of business rates on their large distribution warehouses, some argue their contribution is not enough.
So, what of the countless reviews and consultations that took place over the last year or so? We already know these ongoing reviews are unlikely to produce the privileged status that retailers wish for. The Government raises some £23bn per annum from business rates and this funding would always have to be found from somewhere.
With the recent budget announcement that some 600,000 small businesses will pay no business rates at all, a further quarter of a million will see their rates cut and half of all properties will see their rates either fall or be abolished altogether, businesses across the South West will be eagerly awaiting the results of the Valuation Office Agency’s rating revaluation this autumn to gauge the true impact of changes to business rates.
