But the outcome was not as lucrative as he had hoped. The HMRC’s valuer re-evaluated the Multiflow buildings and found that, in fact, the digital and litho outfit should have been paying a substantial amount more. To make things worse, when Barnes looked to give the surveyors a piece of his mind for the mess-up, he discovered that the chartered surveyors had mysteriously disappeared with a substantial piece of his money – £1,067 to be exact.
In theory, there should have been no need for Multiflow to get a chartered surveyor involved in the first place – the appeals system is designed for businesses to use without assistance. That said, many printers, Barnes included before this incident, do not know appeal is an option. Also, chartered surveyors would argue they have experience and the skills printers simply do not possess, and so handing things over to a professional is a more sensible, and more cost-effective, option. It’s a tricky area, especially as the surveyor should be able to tell you if an appeal could actually see your rate go up.
For the uninitiated, business rates are set every five years on the 1 April – the last revision was in 2010 and the one prior to that in 2005. Rates are calculated with market and economic considerations taken into account and are essentially a rental value paid for the occupation of non-domestic property. And far from being set in stone, these valuations are wide open to appeal.
The regulations permit a company to make one appeal against the valuation in each five-year rate period, but in addition, a business can appeal anytime its building changes either in size or in the way certain spaces are used, or if the circumstances surrounding the property, such as access to a warehouse for example, have altered.
Mistakes are made
The widespread ignorance of the option to appeal is particularly surprising as obvious mistakes do sometimes occur when rateable value lists are drawn up. Checking the information is simply a question of going onto the valuation office website and making sure that, for example, the right number of buildings have been listed. These publicly available details also enable businesses to check their rates against similar buildings in the local area.
The above sounds easy enough for any printer to work out themselves once they realise the option is there. Certainly Barnes now wishes he has taken things into his own hands after learning how simple the process can be. Business support manager at Webmart UK Geraldine Lay actually did appeal herself when she discovered that Webmart might be eligible for a rebate on rates paid on unoccupied space.
"I found the whole thing quite easy to research on my own," reports Lay. "When the 2010 list rates came out, I thought they looked a bit high considering we had quite a few offices on our premises not presently being leased out to anyone by Webmart. I discovered that when tenants leave your premises there’s a period of time where you’re entitled to not pay rates on that space. It was just a case of doing quite a bit of internet research and talking to as many people at the local council and Valuation Office Agency as possible."
This may sound like a lot of work, but Barnes says that using a chartered surveyor instead is, in his experience, a more expensive and more risky strategy.
"You’ve got the problem of trying to find one who’s reputable," says Barnes. "There was absolutely no indication that the chartered surveyors we used weren’t. They were very professional: they sent a representative out, had the Rating Surveyor’s Association (RSA) logo on their website, and I carefully checked over the contract and ran a credit check on the company."
The more reputable surveyors argue that, in fact, there are some warning signs that businesses can look out for to prevent a situation like Multiflow’s. Simon Wanderer, managing director at Simon Alexander, a chartered surveyors that has recently become one of the BPIF’s recommended service providers, says that, for starters, an upfront fee, as requested by Multiflow’s surveyor, should always trigger alarm bells.
He explains that, usually, surveyors will ask for a percentage of the savings made over a certain period of time. This can be tricky too, though: it is crucial to make sure that you are not drawn in by a low percentage rate that actually ties you into a five- or even 15-year contract and so means you end up paying more in the long-run.
Another key detail to watch out for, says principal of Michael Owen business rates consultants Mike Owen, is whether the fee charged is a percentage of the saving or a percentage of the reduction of rateable value. If it is the latter, he explains, the government’s transitional scheme whereby any yearly increases according to market conditions are capped at a certain percentage, could mean that the surveying firm are receiving money for a saving that the company aren’t yet making.
"An example would be where someone was paying £10,000 in 2009/10 and their rateable value went up so that they should be paying £20,000 in 2010/11, but they don’t actually pay that because the transitional scheme would limit the increase to 12.5% more," says Owen. "The cap might be increased to 17% on top of that for the next year and 20% the next. So let’s say the surveyor appeals and gets a reduction to £15,000. He’s saved the business money, but with the staggered increase, the business will potentially be paying a surveyor for a saving they’re not actually benefiting from until a few years down the line."
Wanderer admits, though, that despite the methods of spotting disreputable firms, the chartered surveying industry has suffered with bad firms ripping people off.
"Cowboy agents have been an issue that has affected the chartered surveying profession over the last couple of decades," he says. He adds that a firm which is a member of the Royal Institute of Chartered Surveyors (RICS), the Institute of Revenues Rating and Valuation (IRRV) or the RSA is also more likely to be reliable, unless of course like Multiflow’s surveyor the firm is using the RSA logo without the RSA’s permission.
Hired help
Dodgy operators are the anomaly still, though, and firms should be able to find a reputable surveyor. But the question for those looking at the Webmart example is: why would you want to?
Well, for starters, for smaller businesses, sparing someone the time that Lay had to research and go through the processes would be very difficult – it’s hard enough for some to get enough free minutes to fill out PQQs and tender forms. However, the chartered surveyors claim there are other reasons than purely a time consideration.
Simon Green, partner at Gerald Eve chartered surveyors and property consultants, says that the business rates system can be more complex than it looks and can often need someone with experience to navigate through it. For example, he says, basing an appeal purely on the fact that an apparently identical building down the road is paying less can be a risky strategy. Different buildings may look the same from the outside, he explains, but what people may not realise is that rateable value is based not only on the size of the building but the finish of the spaces inside.
"Things like a warehouse being turned into an office and a mezzanine level being added will all cause the rateable value to go up," he explains. "Unless you’ve been into the building next door and you know that it’s identical and what rent they’re paying, I would recommend that it’s always best to take professional advice, because there’s always a chance that an appeal will lead to an increase in tax."
Another argument in favour of enlisting the help of a professional is that, since 2010’s list review, says Simon Wanderer, the Valuation Office Agency’s stance towards appeals has become more adversarial.
"Before, when you made an appeal, the office might have written summarising their supporting information and so given some basic information that you could use to argue against in your appeal," he says. "But now the onus is on the applicant to prove that the office’s valuation was wrong, not for the office to prove that they were right."
The valuation office and the valuation tribunal – the court where appeals are taken if rejected by the office – are also now more insistent on information being presented in particular ways and on the use of legal terminology, says Wanderer. This, he explains, means that a business appealing without the help of a legal expert is now less likely to be granted right to appeal.
In the end, whether a printer goes it alone or hires a professional depends on the nature of the individual appeal. Some instances, where the valuation office has made an obvious miscalculation for instance, will be more clear-cut and easy to appeal without professional help than other of the more complicated cases where a professional is a must. The golden rule is: if in doubt, check. Then get a second opinion, just to be sure.
Fortunately for Multiflow, the valuation office agreed to let it drop the appeal in light of its surveyor going bust, saving the company from the higher rate, but the experience does demonstrate how tricky dealings with this form of tax can be.
Rateable value top tips
Don’t pay upfront fees "Generally fees should be on a success related basis," says Simon Wanderer of Simon Alexander. "In terms of looking for a respectable agent that’s probably a key measure."
Do appeal a rateable value if you think it is much higher than the rental value of your property. Each five-year list rate should be based to a large degree on rental prices so these two figures should not in most cases be wildly different.
Do approach with caution if a chartered surveyor promises to save you a certain amount. "Just because I’ve saved one person 10% there’s no way that I can say that would automatically apply to someone down the road," says Simon Green of Gerald Eve chartered surveyors.
Do remember that appeal rules in England and Wales are slightly different to those of Scotland, where appeals must be made within six months of a revaluation.
