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Paul Easton of the Edward Symmons Group, comments upon the Government’s decision to postpone the revaluation of business rates

wantspacegotspace.co.uk - Paul Easton of the Edward Symmons Group, comments upon the Government’s decision to postpone the revaluation of business ratesOut of nowhere came the announcement on 18 October 2012 from Brandon Lewis, the Parliamentary Under Secretary of State for Communities and Local Government that the 2015 rating revaluation in England will be postponed until 2017. He certainly got the short straw with that one! Primary legislation will be required to postpone a revaluation so it will be swept up under the Growth & Infrastructure Bill laid before Parliament on 18 October 2012.

So what do Government think they are going to achieve? The announcement says ‘ The decision will avoid local firms and local shops facing unexpected hikes in their business rates bills over the next five years. As business rates are linked to inflation, there will be no real term increases in rates over this period. This reform will provide certainty for businesses to plan and invest, supporting local economic growth’. This means that for 2015-16 and 2016-17 your rates bill will increase only by the rate of inflation (RPI based rather than CPI!).

Whilst this might be factually correct it is misleading and disingenuous to rate payers.

The facts:

The current 2010 revaluation period, 2010-15, is based on rental values and economic circumstances as at 1 April 2008. We all know what happened after that date but rating law means that the current rate bills are based on the ‘heady’ rents agreed around 1 April 2008. By cancelling the revaluation at 2015 and making people pay rates for 2015-17 based on inflationary increases only misses the rather ENORMOUS point that they are still based on rents at and around 1 April 2008.

In most parts of England rental values have dropped, tumbled and in some cases have fallen off the end of a cliff and will be substantially lower at 1 April 2013, the valuation date for the now postponed 2015 revaluation period.

This would mean that lower rateable values would apply with potentially lower rates bills for 2015. If your rent has gone up, and some have since 2008, then your rateable value would increase together with your rate bills for 2015.

So is the Government’s latest announcement on business rates going to be good for business? NO, NO, NO. It is a devastating blow, rather like the announcement in 2007 when the rules on Empty Property Rate changes were announced.

The Government has in my view failed to understand the true implications of its announcement. It must be reeling from the vociferous press comments so far and I fully expect there to be significant lobbying to reverse their position.

So is this a win win situation? Government seems to thinks so. My view? Absolutely not. Business ratepayers 0 – Government – a big fat 0!

No word from Scotland or Wales yet.

Posted by The Editor (wantspacegotspace) on 30th October 2012

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