The figures allocated by the Valuation Office are based on the rental value of the property in question. Part of the problem in the above article is that this figure is rarely accurate for very long.
A professional valuer knows that there are numerous facets to valuing rental property, many of which are quite variable. For a shop in a purpose built out of town shopping centre, for example, a valuer should take into account the foot traffic in the area; which will be partly influenced by how many of the other units are currently occupied.
In recession hit Britain, many units are sadly falling empty as businesses become insolvent or move elsewhere. As they do, foot traffic decreases and the rental value of the property decreases. But does the rateable value decrease?
With reviews only every five years, the answer is no. Businesses will thus be lumbered with reduced foot traffic, poorer retail conditions and disproportionately higher business rates. Businesses will inevitably suffer, therefore, and with internet giants like Amazon selling just about everything from the convenience of one’s own home, the result will inevitably be more closures.
The solution? Perhaps the rateable value calculations need to be more flexible.
Although a business owner can appeal, and for free at that, the process has been shown to be lacking. A queue of 250,000 will cause many unnecessary closures for businesses with cash flow issues they can’t sustain.
Perhaps Local Government should be given a role to play beyond collection on behalf of Central Government. Perhaps local councils could adjust rates as a first port of call for appellants, based on justifiable changes to achievable rent; under the advice of qualified professionals. As opposed to dealing with lengthy appeals, which only large businesses can typically afford, the Valuation Office could instead check and confirm any changes submitted to them by dedicated local departments.
A really bold step would be the removal or reduction of commercial rates altogether, and a turnover tax being implemented in its place in a way that will force Amazon et al to contribute.
Certainly, either the process needs to be adapted and modernised or the Valuation Office needs to expand, fast.
Either way, it is a very great oversight by a Government wishing to impress upon the public its credentials in supporting small businesses, to be watching hundreds go out of business for the sake of short-term tax revenue and bureaucratic inefficiency.
SRJ / LCB