Awareness worry over new business rates reporting obligations

The Chartered Institute of Taxation (CIOT) is urging the Valuation Office Agency (VOA) to help businesses who do not pay or have little experience of business rates – because, for example, they qualify for 100 per cent relief – face new and potentially onerous online reporting obligations. This is vital if the welcome move to a three-yearly revaluation of business rates is to succeed, says the CIOT.

The CIOT has responded¹ to a government consultation² as part of the major business rates review which aims to make the system work better for businesses. Among the Government’s proposals is a move to three-yearly revaluations³ for which businesses must provide information relevant to their valuation to the VOA. Broadly they must notify of any changes to the property, tenancy, or usage that affect rental value, within 30 days of the change – even if they do not pay business rates because of full relief. Businesses that typically claim 100 per cent small business rate relief include shops, small 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.

Kersten Muller, Chair of CIOT’s Business Rates Working Group, said:

“This move to three-yearly reviews is welcome. But for it to succeed it is vital that businesses with little or no experience of business rates get help to manage their obligations. They will need to notify the VOA of any changes to the property, within 30 days and send an annual return to VOA even if there is no change to report.

“The commitment to an extensive communications awareness campaign in the run-up to the new legal obligations coming into force – anticipated in 2023 – is essential. A major challenge is to communicate the changes to ‘hard to reach’ groups such as non-resident owners of unoccupied buildings.

“The reporting deadline of 30 days will require a significant increase in monitoring and will in many cases prove quite onerous for businesses. Allowing 60 days instead would help businesses cope. After all, businesses, particularly medium-sized and larger ones, are likely to have a system of month-end reporting, therefore a deadline of one calendar month after the month in which the reportable event occurs would align more closely with existing practices.

“We welcome the Government’s wish to ensure penalties discern between mistakes and repeated non-compliance.⁴

“The VOA must provide a paper alternative for ratepayers who are digitally excluded that includes sending physical reminder letters and warning letters for penalties for failure to notify alongside the electronic reminder.”

The CIOT welcomes the VOA’s commitment to designing a system that works for small businesses and businesses with large property portfolios. For large businesses with multiple rateable properties the ability to provide bulk data via the online system is essential to minimise burdens, as is a facility for group registration for the online process, says the CIOT.

In separate comments, Kersten Muller said:

“Currently businesses find it difficult to determine eligibility for reliefs and local authority guidance on reliefs can vary between billing authorities. This lack of transparency and consistency increases administrative burdens and adds complexity for business, particularly for those operating across local authorities. The House of Commons Treasury Committee recommended the Department for Levelling Up, Housing and Communities should work with all billing authorities to create a single comprehensive guide on how business rate reliefs are operated by the individual billing authorities to provide clarity for business on what discretionary reliefs they may be eligible for, and what steps must be taken to claim them.”