Could the new Business Rates appeals system affect Council Tax rebanding ?

By | September 1, 2016

Business RatesThe current council tax banding and appeals process has remained pretty much intact since the introduction of council tax on 01 April 1993. Recent proposals in the world of business rates appeals however raise a possibility that changes may be on the way.

Business Rates appeals process

Business Rates appeals processes are currently under reform and a recent suggestion has been made that any appeals against the rateable valuation (the business equivalent of Council Tax bands) will be subject to a new test, that of “reasonable professional judgement” as part of the government’s ‘Check, Challenge, Appeal’ process.

In real terms this change means that any rateable value which is challenged would only be deemed to be wrong if it was outside of the bounds of “reasonable professional judgement”. The figure to be used in making this decision has not been set however a figure of 10%-20% have been suggested. Unless the Valuation Office believed that the correct rateable value lay outside of the threshold then they would be unable to alter the figure, even if it was known not to be right.

Council Tax bands have been something which have seen a great amount of challenge within the last few years, especially for those properties which are close to the lower end of a particular band. If, for example, you are just within a Band B an appeal may find you lowered to a band A. During the year to 31 March 2016 the Valuation Office for England & Wales received 52,000 challenges of which 11,000 led to a band being reduced (less than 0.1% saw an increase).

Changes to Council Tax ?

If the suggested Business Rates system was applied to Council Tax then it is unlikely that there would be any future movement between Council Tax bands as once a property had been placed in to a band the threshold figure would need to be exceeded before the valuation error would become significant enough for an appeal to be allowed. Clearly this would almost exclusively affect those properties which have been over-banded. The difference between the lowest bands, Band A and B, is typically around £200 per annum so the overall figure is upwards of £2 million. This is not a great sum when it’s spread across all the local authority but a large individual sum to the individual tax payer.

Fees ?

Appeals to Council Tax Valuation Tribunals are currently free of fees however a further aspect of the Business Rates changes is expected to be the introduction of a fee to launch an appeal (returned if you are successful in your appeal).

Advice & Assistance from LGFA92

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This article is solely the view of LGFA92, the Council Tax experts, based on our interpretation of legislation. Your local authority is free to dispute this view. A binding decision may require the intervention of a valuation tribunal.