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Business Rates: Itís All Gone Quiet Over There. What Happens Next?

Fri 12th May 2017 | Money & Finance

The 2016-17 season draws to a close with a proliferation of reports suggesting that professional football clubs will have been heavily penalised by the publication of the new rating list.

Time will tell whether the revaluation has had a dramatic effect but perhaps the time is right for a ‘time out’ to examine the likely effects of rates on clubs across the UK.

Football clubs will need to carefully consider the business rates ramifications for budgets up until the 2021-22 season.

First of all, ‘research’ has tended to comprise the regurgitation of Government statistics focusing on extreme increases rather than the norm. The average increase in rateable value at the revaluation (1 April 2017) across the Premier League and EFL is 12%. This amounts to rental inflation averaging 1.71% per annum (between 2007-08 and 2014-15).

It has become common for some commentators to ‘download’ convenient data batches in the name of ‘research’, but the majority of football assessments have increased by only modest amounts.

Large increases have been assigned to a handful of clubs who may have been promoted to the top league, but had previously received allowances or discounts to reflect Football League income.

In effect, the benefit of Premier League status is not charged extra, rather a valuation is adjusted downwards to reflect the lower comparative income.

The manipulated data may suggest that certain clubs’ rating assessments have increased by large double digit percentages. Are the reported ‘increases’ reliable? They probably are but for most clubs the ‘research’ is almost meaningless!

The rating hypothesis is an objective test of rental value at an historic date. At the 2017 revaluation rates are supposed to reflect rental value at 1 April 2015 for all commercial and industrial premises.

If a market improves and property values rise so will rateable values and if demand falls and rents decline, rates should follow. Essentially rates are a function of sector success.

So why the outcry and is there a problem with the system?

The problems usually associated with the rating system in the UK tend to focus on large increases (particularly in some prime commercial sectors of London). The real issues are much more varied and deep routed, albeit capable of a fair reform.

Problems

  1. The gap between revaluations.
  2. Transitional adjustments particularly where rateable values have fallen.
  3. Bureaucracy in the appeals system.
  4. A lack of civil servants.

 

Reforms

  1. Self-assessment.
  2. More regular revaluation.
  3. Abolition of transition.
  4. More investment in the Valuation Office Agency (who administer the regime).
  5. A professional tribunal regime to referee disputes.
  6. A consolidated act of Parliament governing rates.

 

Where football clubs in the UK are concerned about affordability of business rates they may wish to consider local authority ‘hardship’ relief or an appeal under the ‘check, challenge, appeal’ regime.

Care and professional ‘expert’ advice should however be taken before any action is initiated in order to avoid any accidental ‘own goals’. Rates can go up as well as down!

For more information please visit www.montagu-evans.co.uk

Posted by: Aaron Gourley 

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