Talking Point: The taxman cometh
Just four months after announcing its intention to cancel the retrospective business rates bills that threatened thousands of jobs up and down the country, the coalition government has introduced a complex set of arrangements for freezing some payments and spreading others with the promise of the abandonment of retrospective charges, but only in some circumstances.
Under existing regulations, the Valuation Office Agency (VOA) can legitimately create a new liability spanning as far back as 1 April 2005 – a scenario evidenced by several recent high-profile cases, including Liverpool and Humber docks, where new liabilities have created up to 42 months of backdated charges, amounting to £700m.
While the coalition has promised to assist in some well-publicised cases (including the ports and where there has been a split or merger of an existing assessment), the removal of these backdated charges are only applicable in certain circumstances.
However, where an alteration has been made to an existing commercial property; namely where businesses have developed or extended new industrial or commercial premises since April 2005, ratepayers may face an historic increase in liability if the VOA uncovers such a change prior to 1 April 2011.
In these circumstances, ratepayers are urged to check their existing rating assessments online and, if an increase in assessment is received, consider lodging a statutory appeal within the specified six-month timescale.
In some cases, the basis of rateability itself is challengeable, particularly where there is a dispute over the correct date of completion. In other cases, there is a limited period of time in which to dispute and reduce the level of assessment and mitigate payments covering the previous financial years. It is therefore advisable to seek assistance from a qualified chartered surveyor who will be able to advise on the most appropriate course of action.
There appears to be a drive to recover additional tax charges in order to plug the gap in public finances and the application of a more aggressive approach by HMRC under the rules is now causing serious concern to the business community.
Given the current trading environment, business should make proper provision or be faced with large additional charges in 2010/11.
Richard Wackett, director and head of rating at Lambert Smith Hampton
