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In Focus: Relegation. Can It Reduce Your Business Rates?

Mon 27th Mar 2017 | Money & Finance

It is that time of year again….the happy financial prospect of promotion for a few or the nightmarish vision of relegation for other clubs. 

So how does league status affect a club’s rating assessment and does relegation lead to an automatic reduction in business rates?

The answer to the last question is a resounding ‘no’ but also a ‘no’ to those fearing an increase upon promotion, but that is not the end of the matter….

As the law stands all rateable value assessments will be subject to a general revaluation in April 2017. The valuation date (economic factors) has been set at 1 April 2015. The approach to valuation is not prescribed but the statute tells us that we must estimate the rental value (of the stadium) at the relevant April 15 valuation date. The favoured valuation method is by reference to replacement build cost with adjustments for age, obsolescence and (uniquely for football) the club’s ‘ability to pay’ at April 2015.

Changes in assessment can be made for physical factors (improvements or reductions) between revaluations but not economic decline (including promotion or relegation). The possibility of extending ‘ability to pay’ mid-term following relegation is still possible, but only where there is a physical decline in the stadium or to the surrounding locality. The same could of course apply to physical improvement.

So for those afflicted by relegation there are possibilities where surrounding or internal retail closes, advertising hoardings are removed, car parking is redeveloped or capacity is reduced. The identification of adverse material changes presents a possibility, the challenge is to demonstrate a fall in intrinsic stadium value. By the same virtue stadium improvement has the potential to attract increase in rates, so beware!

www.montagu-evans.co.uk

Posted by: Aaron Gourley 

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