Business rates are the government’s commercial equivalent of Council Tax and cost UK ratepayers around £27 billion a year. They are a big overhead for golf operators. After payroll, they might be your largest overhead and most likely bigger than your Corporation Tax bill.
A national business rates revaluation is fast approaching. Golf operators - be they golf clubs, golf centres, golf driving ranges or golf hotels - need to think about minimising their forthcoming new bill.
In simplified terms, your rates bill has two components: your venue’s Rateable Value times the multiplier. You cannot influence the multiplier – it is set by government each year, but you can do something about your future Rateable Value.
Your Rateable Value is meant to represent your venue’s yearly rental value assuming it is all in good physical repair at a specific point in time. The current valuation date is April 2008 but for the forthcoming revaluation it will be April 2015.
UK golf operators have faced challenging times since the autumn 2008 global financial crisis. In January I spoke at the GolfBIC conference in Harrogate about the effects on the golf property rental market and the forthcoming rates revaluation.
Your Rateable Value is a hypothetical assessment. Your venue may be freehold with no rent payable and parts may be in poor physical condition. However, that won’t stop you getting a yearly bill of around £40,000 for business rates if the venue’s estimated rental value is in good repair, and hence the Rateable Value is £80,000. The government’s current tax rate on Rateable Value is near on 50 pence in the pound.
Your new draft Rateable Value gets published online in October with new rates bills starting on 1st April 2017. You can challenge the new assessment. The government has, however, introduced a major change to the current appeal process which has operated for 25 years.
The new system is called ‘check, challenge, appeal’. For years the current business rates appeal system has been heavily criticised for being too slow. A contributing factor is that the system has been plagued by poorly researched speculative appeals by ratepayers and their professional advisers.
Over 955,000 appeals have been submitted on the current 2010 Rating List. The vast majority of these appeals end up with no saving, but had to be processed by the Valuation Office Agency, the body who are responsible for setting the Rateable Values in the first place.
The government’s aim with the new system is to weed out ratepayers’ speculative proposals, leaving only genuine cases going forward.
Fundamentally, the main thrust of the ‘check, challenge, appeal’ process is having to state all your key evidence upfront when you first challenge the new Rateable Value. Critically, the new rules suggest limited scope to introduce further key evidence later on to advance your case. Thus, if you are not really thorough upfront when challenging your Rateable Value, you severely diminish your chances of success later on.
An early criticism of the new system is that when the Valuation Office publishes your new Rateable Value, they will not provide their supporting evidence in reaching their conclusions. They will not make available the data of rents paid at relevant golf venues in the UK.
If you do not have access to this information, then how can you be expected to make a strong case at the outset? This is particularly so if you are not aware of the key evidence needed to support your case and are not able to introduce new, important evidence at a later stage.
If you have used a professional adviser to appeal your Rateable Value in the past or are thinking of using one in the future, then bearing in mind the change in procedure regarding early production of rental evidence, I recommend that you make sure that they really do have proper knowledge of the golf club rental market.
After the new draft Rateable Values are published this October, I will be taking a close look at my clients’ new golf venue assessments across the country and comparing them with the key golf property rental evidence.
If you would like me to have a look at your venue’s new Rateable Value and give you my view on whether it is too high, then just send me a short email in the near future or give me a call (details below). I will add you to my list of venues to look at. I will do this research for you without charge or obligation on your part.
It will be interesting to see how accurately the Valuation Office has evaluated changes in the golf sector and what the opportunities are for golf venues to reduce their business rates bills from April 2017 onwards.
Certainly, in previous rates revaluation exercises there have been some good savings to be made. Tax savings of £30,000 to £60,000 over the life of the various Rating Lists on golf venues were commonplace. In some cases, the savings were much higher. I had a number of cases for clients where the savings were well over £100,000 and for one client the saving was just short of £½ million.
Similar results may be possible for venues with the forthcoming April 2017 revaluation, but considerably more time and effort upfront will be needed to get such results.
For more information on the subject, or if you would like me to add your venue to the list of Rateable Values to research after the new figures are published, then you can contact me on:
01985 214147 or at firstname.lastname@example.org.