Second Stage of Business Rates Consultation Looms
The second phase of consultation responses for reform of the Business Rates system in England and Wales are due for submission by 31 October 2020. This follows the earlier consultation responses lodged on 18 September.
As announced in the 2020 Budget, HM Gov have commenced a wide ranging consultation on reform of the Business Rates system that governs Rates liabilities in England and Wales. As well as making submissions on behalf of individual clients on the first phase, Matthews & Son LLP have also contributed to wider responses on behalf of trade bodies such as the British Ceramic Confederation representing clay building product manufacturers across the country. The first, much shorter stage, dealt largely with Rates reliefs, a subject very much in focus at this current time where many clients operating sites have been temporarily shut or, worse, are planned for permanent closure.
The next, more detailed stage requires responses by the end of this month and Matthews & Son LLP are currently contributing to trade body responses on this phase. The second stage deals with a wide range of topics including Transitional Relief, rates valuation methodology, the valuation of Plant and Machinery, the ‘Check, Challenge, Appeal’ system and non-domestic rates bills themselves.
In these difficult times a common thread is emerging in responses for our specialist sectors that highlight the significant burden Business Rates has on capital budgets and investment decisions for the future. We fear that these pressures will only increase in future years without recognition of this fact in the Rates system. The sectors we represent are very much at the sharp end of economic recovery, contributing significantly to construction output in the country and if the cost impact of Business Rates is left unchecked it could have significant impacts on the ability for that contribution to be justified.
Advising on Business Rates for the Minerals, Waste Management, Energy and Heavy Manufacturing businesses has been a key service area of Matthews & Son LLP through successive Rates Lists and we consider it highly important that the voice of these sectors is clearly heard.
For more information on the Business Rates process or the consultation itself contact a member of the Business Rates team for more information.
A copy of the consultation document can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/903429/Business_Rates_Review_-_CfE.pdf
Why All Mineral and Waste Valuations Are Not Equal
In the specialist property sectors in which we work (minerals, waste, energy, heavy industrial), we are often presented with the general client request that ‘we need a valuation’. Any competent valuer and Chartered Mineral Surveyor will always follow up that initial request with a check as to ‘what do you need the valuation for and how are you wanting to use it?’ And that is because not all valuations are the same in form or function.
Minerals and waste valuations are always dictated by their end purpose, as the purpose will drive the valuation basis, the valuation methodology and whether the valuation is governed by formal reporting standards. The first two factors will dictate how a valuer approaches and calculates the value of a property and will always affect the reported figure. It is for this reason that valuers who approach every property and valuation purpose the same way, will often end up mis-reporting value and causing headaches (or worse) for their instructing clients. It is essential that the purpose of the valuation is clear to, and agreed by, all parties from the outset.
All valuations undertaken by Chartered Surveyors need to be undertaken having first checked whether they fall within the RICS Valuation Standards, commonly referred to as ‘The Red Book’. These mandatory standards set out the key steps, bases and considerations that valuers must take account of and capture a wide range of regulated valuations. These include valuations for secured lending and valuations for financial statements amongst others. They set out stringent requirements on how a valuer approaches every stage of their report from the taking of instructions, through site inspections, record keeping, methodology, considering value and reporting their findings. Many of these requirements should be followed whether or not the valuation is a regulated valuation.
Some valuations, identified as “exceptions” fall outside the strict application of the RICS standards (including, for example, valuations for internal discussion purposes to inform business strategy) and can be more flexible in their approach and method. Whilst some of the Red Book standards will apply, a valuer providing advice in such exceptional cases can depart to some degree from methodologies, perhaps providing a range of values, or values that fit ‘what if?’ scenarios. It is essential however that the valuer makes clear that the valuation is an exception to the full Red Book regulation and explains why in their report. It should also be clear that the valuation should not be used for any other than the stated purpose. A key reason for this is that changing the approach and methodology can, and does, change reported value. A client that has not been informed of this at the outset and uses a valuation falling within the exceptional criteria for a formal, regulated, purpose will be asking for trouble. Likewise, a competent valuer will not allow a valuation to be used for the wrong purpose and should never simply be ‘signing off’ an exceptional approach as a formal valuation.
Over the years the RICS have taken great care to improve and strengthen their standards for property valuation but sadly we still see a number of negligence claims on which we are asked to provide Expert Valuation advice where Valuers have adopted the ‘one size fits all’ approach, resulting in their clients incurring losses. Sadly, despite the standards it is clear that some valuers are not following them!
At Matthews & Son LLP, as an RICS Regulated Firm we take our valuation responsibilities most seriously. All our valuation reports are prepared by RICS Registered Valuers with many years’ experience with these specialist properties and are always peer reviewed by another valuer before issue. The Standards may seem overwhelming and, to some, a ‘nuisance’, but explaining to clients WHY we follow them is a key part of the valuation process. Valuations are not all created equal!
CONTACT
Appointment to RICS President’s Panel of Arbitrators
A new senior level professional appointment for Andrew Crawford, a Chartered Surveyor and Partner in the Matthews & Son LLP team.
Business Rates Reform
As you may be aware, HMG announced in the 2020 budget that it would conduct a fundamental review of business rates in England. Matthews & Son are advising on the consultation through various channels.
Planning For The Future
Matthews & Son are currently considering the Governments consultation on reforms to the planning system.
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