The “onerous” business rates appeal process is “pouring petrol on the flames” of struggling restaurants and accelerating CVAs and closures, according to experts.
Just 1.3% of the 1.85 million rateable properties in England have been contested in the 12 months since the 2017 increase, which saw the biggest jump in business rates for a generation, a Freedom of Information (FoI) requested submitted by commercial real estate company Colliers International has revealed.
John Webber, head of business rating at Colliers International, told The Caterer: “The numbers are clear – the amount of people contesting their rateable value is significantly down.
“We act for a lot of F&B and pub operators and they are all suffering in terms of being unable to navigate the system and finding it very difficult to deal with the new appeals site.
“The system is stacked against them at the moment and if you look at the CVAs going through it’s about rents. The one thing they cannot do anything about in the short-term is business rates as the government has made the appeals system so onerous, It’s the petrol being poured on the flames, I’m not saying it is the cause of the difficulties but it’s accelerating the demise of some operators and contributing to the CVAs and closures.”
The 2017 business rates revaluation saw some operators in London and the South East receive a 50-100% increase to their bills. Webber said that the new appeals process, which is called Check, Challenge, Appeal, is time consuming and onerous, with the potential to take up to two-and-a-half years. He said that Colliers International was receiving calls from all sectors every day adding “ratepayers are tearing their hair out”.
The information revealed by the FOI showed that in the last 12 months 23,770 checks have been carried out in comparison with 220,000 appeals conducted in the 12 months following the 2010 rates review.
Webber said: “After 12 months of seeing some of the biggest increases in a generation, enormous increases, particularly in the hospitality sector and particularly in London and the South East, it would seem a bit odd that just 1.3% had appealed, but it’s not odd because we deal with this every day.
“There have been more CVAs in the last 12 months than in the dark days of the 2008-2009 financial crash and one of the things adding to this has been rates and the lack of ability to navigate around this process.”
Webber said the Government’s Valuation Office Agency (VOA) is trying to take action but added: “It’s not enough and it would be helpful if the VOA would indicate when they anticipate progression beyond this point.”
Chancellor Philip Hammond announced that the next business rate revaluation will be brought forward to 2021 in his Spring Statement, a revelation slammed by the industry as a missed opportunity to provide much needed relief.
At the time UKHospitality chief executive Kate Nicholls said: “There are some tentative steps here to support the sector but this is a missed opportunity to provide the decisive and positive action on business rates that hospitality desperately needs, and for which we have been calling.
“Bringing forward the revaluation will not provide the immediate support that businesses need unless it is accompanied by widescale reform beforehand.”