As the Enterprise Bill 2015 receives Royal Assent, Lambert Smith Hampton (LSH) slams the legislation as a step too far for beleaguered business rate payers, claiming it will make it virtually impossible for them to be sure they are paying the correct amount.
The widely-criticised Enterprise Bill 2015, which was announced almost a year ago as part of Sajid Javid’s first speech as Business Secretary, was enacted on Wednesday 4 May 2016 to become the Enterprise Act 2016.
The significance for business rate payers arises from clauses 22 and 23.
Lack of transparency in disclosure of information
Clause 22 is to do with who the Valuation Office Agency (VOA) can share information with. Although the ability to share information has been widened, allowing the Government to share details regarding a rate payer’s property and rent between its various bodies and their subcontractors, it will not help rate payer because they are not included.
Burden of proof on the rate payer
Clause 23 sets out a revised appeal procedure, which is intended to ‘simplify’ and ‘clarify’ the appeal system, through a three-stage process known as ‘Check, Challenge, Appeal’. The formal challenge stage is going to be the most important in the process as it introduces a front-loading of disclosure and exchange of information; difficult given the implications of Clause 22 above!
The VOA may, or may not, provide detailed evidence at this stage, at its discretion but the burden of proof is entirely on the shoulders of the rate payer. Judge, jury and executioner All arguments and evidence will need to be set out and detailed within strict time limits, with the VOA the sole arbitrator of whether the challenge is valid. And if that isn’t enough, greater penalties for knowingly, recklessly or carelessly providing false information within the appeals process will be applied.
Balance between need and fairness
LSH’s business rates experts challenged the proposals as part of the House of Commons consultation process on the basis that they were restrictive, long-winded and punitive. However, the Government dismissed any such recommendations and the Enterprise Bill was enacted with minimal alterations.
Paul Easton, National Head of Business Rates at LSH, said: “We recognise the need for an increasingly sound tax base for local authorities but there must be a balance between need and fairness. The Enterprise Act was intended to cut red tape and back business to create new jobs, but it will have precisely the opposite effect. In fact, the sceptics among us might say that these changes are designed to dissuade challenges!”
Time is of the essence
The enactment of the Enterprise Bill marks a further date in what is already a busy time for the business rates industry. The Enterprise Act 2016 provisions will apply to all appeals lodged from 1 April 2017 which coincides with the 2017 revaluation, at which point 1.8m properties across England and Wales will receive new rates bills based on rental values as at 1 April 2015 – seven years and once recession since they were last reviewed!
Paul added: “Rate payers and their agents are going to have to have some serious conversations about how they will approach the new process, particularly in relation to the amount of time needed for preparation of the challenge, and they don’t have long. With many businesses set to receive significant fluctuations in their business rate liabilities from 1 April 2017, these latest measures are simply a step too far.
"LSH will be keeping a close eye on the details of the Enterprise Act 2016 as they emerge over the coming months but we strongly recommend anyone who isn’t already represented by a business rates advisor, seeks professional advice.”
>> Download our Check, Challenge, Appeal briefing note for more information