Rating Update - Non-Domestic Rating Bill now officially Act

In this update:

• Non-Domestic Rating Act 2023
• Material Change of Circumstances
• Completion Notices
• New duties on ratepayers
• Autumn announcements

Non-Domestic Rating Act 2023

In our September update we summarised how the Department for Levelling Up, Housing and Communities (DLUHC) explained what the Government believed that the Bill would deliver.

Despite a number of amendments having been tabled and debated, the Bill passed through largely without changes, with only a few minor alterations. See more here.

Most of the changes enabled by the Act will require regulations to bring them into force.

Material Change of Circumstances

The changes to the Material Change of Circumstances (MCC) provisions take immediate effect.

These have the effect of tightening the scope of MCCs in England so that new legislation, licensing regimes and guidance from public bodies will not be grounds for a change in Rateable Value between revaluations.

This reflects Government policy following on from the legislative measures that were taken during the COVID-19 pandemic, which removed the ability to argue that any coronavirus-related matter was grounds for an MCC appeal. We feel that this change goes far beyond the scope explained by the Government and is unreasonable and unfair on ratepayers. Unfortunately, attempts to remove this change from the Bill were unsuccessful, and we suspect this will lead to more litigation in the future.

Completion Notices

There is also a change to completion notice regulations relating to buildings that have been temporarily removed from the rating list during redevelopment, where billing authorities will now be able to issue completion notices in the same way as for a new building. We are advised that this change will be implemented after two months.

New duties on ratepayers

In our Spring Budget 23 update, we considered the impact of the new proposed duties on ratepayers to inform the Valuation Office Agency (VOA) of any changes to the occupier and property characteristics which affect the assessment of their properties for business rates. These include rent/tenure changes, occupation changes, and physical alterations.

The Government explained that these measures are required to assist the move to more regular revaluation cycles and will be accompanied by more transparency from the VOA.

The introduction of the duties will represent a fundamental change in the way that the rating system in England operates. We will continue to push for as reasonable a set of regulations as possible.

In the House of Lords, the Minister stated:

As I said, the Government will not formally activate the VOA duty until we are absolutely satisfied that ratepayers can reasonably and efficiently comply with it through the online service. Guidance and support will be offered to those engaged in the soft launch of the system. As is the purpose of the soft launch, the guidance will be developed as we learn from engagement with users.

The VOA has commenced engagement with us and other ratepayer representatives and professional bodies. We will do all we can to ensure that the regulations and eventual online system deliver processes that are fair and as easy for users to navigate as possible.

There has been no commitment from the Government or the VOA as to when they expect the new processes and systems to be operational. We will keep you informed.

Autumn announcements

The new session of Parliament commences with the King’s Speech on 7 November 2023. We do not anticipate that this will include any business rates-related measures. We do, though, expect some relevant announcements at the Autumn Statement on 22 November 2023, potentially including:

– Confirmation as to whether the UBRs for 2024/25 will again be frozen, or increased in line with September’s CPI of 6.7% (or by a lesser amount)

– Confirmation as to whether this year’s 75% relief for retail, leisure and hospitality properties (capped at £110,000 per business) will be continued and, if so, in what way

– A possible announcement on changes to the empty property rates regime, following the recent consultation on Avoidance and Evasion of business rates