Moving to three year business rate revaluations could be a SME headache

Cries for help are already going out for small businesses who may be affected by more reporting obligations if moves to change from five to three yearly revaluations are brought in.

The change to three yearly revaluations is one of several proposals put forward by the Government in its long running review into the business rates system. This proposed change however seems to have gained more traction than other proposed reforms.

Whatever the advantages there will be one disadvantage for small businesses who do not pay or have very little experience of business rates – they will possibly fall foul of potentially onerous online reporting obligations.

The Government has widely consulted business and stakeholders as part for the review, but businesses will have to provide information relevant to their valuation to the VOA that covers elements such as notifying of any changes to the property, tenancy, or usage that affect rental value, within 30 days of the change. This will be expected of landlords and businesses who do not pay business rates due their being in receipt of 100% business rate relief. Typically, this relief captures many small shops, offices and some holiday lets.

Businesses will have to make an annual return to the VOA even if there is no change to report in the past 12 months. Assuming the new review timetable is adopted in April, 2023, it is essential that small businesses, whom may be unaffected by the Revaluation in terms of their rates liability, are to be made aware and educated about the new legal obligations. That will be a major challenge in itself with some groups extremely hard to reach, for example non-resident owners of unoccupied buildings.  In addition to the requirement of notification of changes in the annual return, businesses will also be required to report any changes during the year within 30 days, which in the case of ratepayers with large portfolios will create its own administrative challenges.

The reporting deadline of 30 days is stringent and will need increased vigilance by firms so not to fall foul of the system. It will also place another burden on the already stretched VOA to deal with late or non-existent reporting. Allowing 60 days may help businesses to cope, as many medium-sized and larger outfits are likely to have a system of month-end reporting thus aligning with a deadline of one calendar month after the month in which the reportable event occurs.

On the positive side, the Government states it is wishing to ensure penalties distinguish between mistakes and repeated non-compliance, so let’s hope we don’t see an avalanche of penalties materialise soon after any new rules come into play.

It is also unclear if the VOA would provide a paper alternative for ratepayers who are digitally excluded, that should include physical reminder and warning letters for penalties for failure to notify alongside any electronic reminders.

The VOA has committed to developing a system that works equally for SMEs through to businesses with large property portfolios. Large businesses with multiple rateable properties require the ability to provide bulk data via the online system to minimise time and costs, small businesses require a simple and easy to use portal that can be updated without the need for costly training or software – no easy feat in the public sector not renowned for producing user friendly systems at the first attempt.