The Henry Stewart Rating Conference, Wednesday 23 June 1999

Citation

Plimmer, F. (1999), "The Henry Stewart Rating Conference, Wednesday 23 June 1999", Property Management, Vol. 17 No. 4. https://doi.org/10.1108/pm.1999.11317dac.002

The Henry Stewart Rating Conference, Wednesday 23 June 1999

Keywords Property valuation, Rating revaluation, Land tribunals

Rating is not, as they say, everybody's cup of tea! At various times over the centuries, as a system of land taxation, it has had a bad press and even the 1990 reform, which should have resolved all of the problems, managed to add a few more besides. To cut an almost 400-year-old story short, rating is complicated and, according to the speakers at the recent Henry Stewart Rating Conference, is also unpredictable.

There we were, barely ten months away from the implementation of the 2000 revaluation and the panel of speakers were repeatedly frustrated in their efforts to explain the new system because it has still not been finalised and announced by government. Wasn't the introduction of a nationally set uniform business rate designed to introduce an element of certainty for ratepayers? How can they be best advised if the professionals do not have time to analyse the changes which government is proposing in the light of their six local government consultation documents?

So, what could the speakers do? They set about describing and analysing some very useful information, some of which provides a background to the revaluation and involving some speculation as to what is likely to happen.

Victor East provided an outline of the revaluation programme adopted by the Valuation Office Agency (VOA). The process of valuation, creation of draft lists and deposition of lists at local authority offices is a familiar one, but the management of the process within the new stream-lined VOA proved more interesting. Their extensive application of IT for pattern valuation and to manage their lease register has enabled to VOA to undertaken the revaluation of 1.7 million hereditaments in under 18 months (since 1 April 1998 when formal ratification of the 2000 revaluation was made, with the identification of 1 April 1998 as the antecedent valuation date). The use of IT does not end with the revaluation process and rating lists are likely to be placed on the Internet. Also, there is an intention that 25 per cent of all communications will be by electronic means by 2002 and that 100 per cent of the dealings with the public will be electronic by 2008.

Jerry Schurder did what Victor East declined to do and forecast the changes in rateable values for different property types in different regions as a result of the revaluation. Inevitably, this was a presentation with a more speculative content, but the changes in actual rateable values which should reflect the changes in market prices will be obscured by the effects of transition on individual ratepayers - both existing transitional arrangements and those likely to be imposed for the next revaluation. Options for post-2000 transition were discussed. (Do we really need transitional arrangements at all when the whole point of a revaluation is to re-establish relative tax liabilities based on up-to-date property values? Well, yes, it seems that I am overlooking the political angle and that makes all the difference!)

In dealing with the anticipated changes in appeals procedures post-2000, Roger Messenger gave an informed commentary of the DETR's Consultation Paper on the subject (DETR, 1999). The objectives of a revised appeals procedure include the reduction of the rate of appeals from the 50 per cent experienced following the 1995 revaluation to between 10 and 15 per cent; more information and better guidance for ratepayers, advanced timetables for appeals and simplicity!

The consultation process included early discussions with professionals, professional bodies and responses from other interested parties, so while we may not be sure what system is going to be operating from 1 April, all the right prerequisites seem to be in place. Changes which were trailed included the enforcement of a postponement policy, programming of appeals, early exchange of comparable evidence, greater use of pre-hearing reviews, and still no draft regulations in sight!

A legal perspective was provided by Tim Mould who considered the impact of the Woolf Reforms (which resulted in the Civil Procedures Rules 1998). The cultural changes will affect the conduct of Lands Tribunal proceedings and the management of Tribunal proceedings and more specifically affect applications for judicial review and appeals by case stated from the Lands Tribunal to the Court of Appeal. The over-riding objectives of the Woolf Reforms were to enable courts to deal with cases justly and this includes a reduction in expenses. They take the form of the duty of the court to take a hands-on management role, notwithstanding the views of the parties and to ensure that, for example, a £200 claim does not involve a £2,000 claim for fees. It may be that the Lands Tribunal will adopt these principles.

It is also likely that direct access to the bar will be facilitated by the flexibility provided by these reforms and that the conducting of litigation which is tactically to the advantage of a client will be increasingly unavailable.

Issues raised by recent case law were also discussed, including the need for evidence (Richards v. Surrey Hampshire Borders NHS Trust [1999]), and cases which dealt with the problem of identifying the precise limits and purposes of exemptions of property used by the disabled (e.g. Evans v. Suffolk County Council [1997]).

Following in this theme, Blake Penfold talked about the review of charity taxation undertaken by Customs and Excise, and in particular the implications for so-called charity shops. It seems likely that such trading properties will lose their rate relief unless it can be demonstrated that a significant proportion of sales space, turnover or items sold relates to donated goods.

He then considered the future of council tax and repeated the statement in the Government's white paper on the Reform and Modernisation of Local Government (DETR, 1998) that a council tax revaluation will be carried out during the next Parliament "if it proves necessary". Nothing new there!

However, the proposal that local authorities will be allowed to hold local referenda as part of the decision-making process for budgets and spending proposals is new. With the proposal to end universal council tax capping, the reduction in central power is being replaced by an increase in local power in the form of locally-agreed arrangements between councils and the local business community to involve business in council expenditure planning. There will be a scheme to allow councils to set a supplementary local rate or to receive a rebate on the national rate which will be spent within the local authority area if agreement between councils and the business community can be reached on how the revenue is to be spent. The implication if the councils and the business community fail to agree on how the additional revenue is to be spent is, apparently, that the money will be raised but paid into the national rating pool! The supplementary rate could be levied selectively on specific hereditament and there could be an added advantage in the setting of an additional local rate for the so-called "beacon authorities".

The issue of "small business" relief was considered, including the central question of what is a "small business"? Some large companies occupy small (in rateable value terms) properties, yet existing rate relief does not assess size in terms of turnover.

There is also a financial management and policy review of valuation tribunals, aimed at addressing issues of jurisdiction and membership, administration and staffing and the appeals procedure. It is not envisaged that the essential character of the appeals process for non-domestic rating appeals will change from its historic "cheap and cheerful" image. But it is hoped that variations of procedure will be increasingly standardised into a "best practice" model.

Paul Sanderson provided a more technical overview of valuation issues likely to emerge following the 2000 revaluation dealing with the prescribed decapitalisation rate (likely to continue); the review of prescribed assessment for hereditaments occupied by what used to be called statutory undertakers (e.g. rail, gas and electricity companies) - no change expected there, either; and considered the second Wood Committee Report into the rating of plant and machinery. Before the audience could mentally switch off for this section, he reminded us that all hereditaments, shops, offices and factories, have some plant and machinery in them - lighting, heating, supply of water and drainage - so plant and machinery is not the specialism many people would have us believe.

Charles Partridge brought us further back to basics with a detailed review of the Rating (Valuation) Act, 1999, which seeks to clarify the state of repair which must be assumed of a hereditament following Benjamin v. Anston Properties 1998.

Finally, with the intriguing title of "Valuing in a vacuum", Geoffrey Soar considered how to value without evidence, detailing the problems valuers face when dealing with all of the traditional methods of valuation, together with practical examples.

However, for those who are involved with the rating system, either as valuers, legal advisors, or even ratepayers, there is a fundamental sense of continuity, of predictability about rates and the rating system. What the speakers at the conference demonstrated was a veiled frustration at the government delay of the announcement of the detailed regulations, procedures and provisions.

This is not, of course, the fault of the speakers and, between them, they provided an interesting, varied and informative programme - yes, you've guessed it - rating is my cup of tea. There was a curious mixture of levels of explanation - one speaker defined rateable value, another mentioned N/J with no explanation. However, each speaker was enthusiastic, knowledgeable and willing to engage with the audience. and the notes provided were, typically, comprehensive.

It was pointed out by one of the speakers at the conference that rates is the only national tax administered by a government department (all other taxes are administered either by the Inland Revenue or by Customs and Excise). It is to be hoped that the failure to provide appropriate regulations nine months before administrative and procedural changes are due to be implemented does not mean that responsibility for the nation's main property tax is in the hands of amateurs, because, despite its age and familiarity, the rating system is getting more detailed and, while the rating system may be robust enough to survive, rating valuers need time to absorb the new rules and their implications. Is this another call for more CPD courses?

Frances PlimmerEditor, University of Glamorgan

References

DETR (1998), Reform and Modernisation of Local Government, Department of the Environment, Transport and the Regions.

DETR (1999), "Appeals procedure", a consultation paper on the procedures for handling appeals against non-domestic rating valuations, Department of the Environment, Transport and the Regions, March 1999.