Wednesday, September 30, 2020

Surge in business rates appeals revealed as COVID-19 leaves its mark

The latest figures released by the Government on CCA, the “Check Challenge Appeal” Business Rates Appeals System illustrate the intense pressure on the VOA, the Government’s Valuation Agency to deal with appeals caused by the “Material Change of Circumstance” following the COVID-19 pandemic.

The new figures add even further pressures on a system that was overstretched before the pandemic, and according to Colliers now needs a radical re-think of approach before even more businesses keel over.

The VOA’s figures show that in England, in the three months to June 30th, just under 145,000 of new Checks (the first stage of the process) have been registered. This is nearly the same as the three-year figure announced three months ago where in the period between 1 April 2017 and 31st March 2020, a total of 158,910 Checks had been registered.

The new figures effectively double the total number of Checks registered up to a massive 303,820, of which 69,480 are unresolved.

These figures do not of course take into account the number of new Checks registered in July, where figures are also expected to be high.

The massive increase in the number of appeals started because of an increasing number of companies claiming a Material Change of Circumstance (MCC) as a result of the impact of COVID-19 on their businesses. This has impacted all sectors. In effect businesses are arguing that rental values have plummeted because of the effect of COVID-19 and as their rateable value should mirror rental values, these need to be adjusted downwards significantly.

“COVID-19 has led to the biggest Material Change of Circumstance the country has seen in rating history and the system has been around for over 400 years.” says John Webber, Head of Business Rates at Colliers International. “You could say we are on a wartime footing.”

“Businesses are claiming MCC either as a result of the impact of the initial Lockdown and/or on the impact to businesses as they have re-opened. With social distancing and consumer and worker fears about returning to the shops or offices to work, few businesses in the country are operating on pre-COVID levels.

“There is no doubt that their circumstances have changed materially. Footfall has reduced massively, and many offices, shops and restaurants remain closed or on reduced capacity – these are all valid reasons to reduce the rating assessments.”

Webber is advocating a radical approach to deal with the crisis. “If the VOA takes its time and waits for all the evidence to come in, many businesses will simply not be around by the time it decides what to do.

“We urge for a collaborative approach with the VOA getting together with the ratepayers and their agents as soon as possible to agree sensible and fair reductions across the board to those sectors most impacted. This will be essential if businesses are to plan ahead and hopefully work through this crisis.

“Of course, if we suddenly see a V shaped recovery, the VOA could remove any extra allowances given – and businesses would pay more again – but for the moment we believe this outlook is unlikely.”

Webber concludes: “With a delayed Revaluation until 2023, the VOA will hopefully now have more resource to dedicate to making sure CCA works as best as it can. We cannot leave things to chance – or we will see more closures and job losses. The bloodbath has only just begun.”

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