Following news that a major rating agent practitioner is launching a ‘Covid-19 group action’ as a means to identify wholesale reductions in assessments following their view of falling rental values, we take a look at the implications for Local Authority Business Rates teams.
One of the UK’s biggest rating agents have recently published an article on their website outlining their plans to claim a reduction in business rates liability for a number of businesses under a ‘Covid-19 group action’. They estimate that “over 85% of businesses in England and Wales” could be eligible for a reduction in their ratings assessment.
Following the Covid-19 pandemic, they state there has been a fall in demand impacting rental values of many buildings, “causing a structural change in the property market”. On this basis they believe challenges can be made to “reduce rate assessments and argue for lower rates bills”. Whilst they recognise some businesses have received grants and assistance to help reduce business rates bills, many have not or have simply fallen through the gap.
We appreciate that many Local Authority Rating and Revenues teams are already stretched to capacity processing expanded discounts and grants and dealing with the administration and disbursement of these. If this group action gains traction, Revenues teams will also have to deal with additional identification and analysis in order to accurately forecast the losses. However, this should not be to the detriment of the work already being carried out to ensure that businesses that need financial aid, get it quickly and easily.
The agent claims that the group action could affect over 85% of ratepayers. Our analysis indicates that, whilst it could be substantial in terms of both value and volume, it is likely to be less than the 85% quoted but will affect every Council across England and Wales. As always, the real challenge and work will be in identifying which businesses are most likely to claim and this is where we can assist.
It is therefore imperative that every Council factor this into their forecasting over the next year or so. It is possible to do this whilst still maintaining a focus on supporting businesses through the current lockdown. The key point here is not to get distracted and bogged down with the ‘what-if’ scenario.
Balancing risk with current heavy workload
By working with companies like Wilks Head & Eve, Local Authorities can continue to operate on a ‘business as usual’ basis. The team provide a forecasting service that supports and specialises in incorporating emerging risks such as group action appeals. Wilks Head & Eve do all the heavy lifting and have the expertise to both predict as yet unknown challenges and also to analyse ones that have already been made. We then ascertain the likely outcome of success and forecast the financial implications of those successful challenges. Business Rates and Finance teams can be rest assured that they can still meet the current high demands placed on them to service the immediate requirement of issuing grants and administering financial aid whilst planning and budgeting for the future.
Find out more about our expertise in this area in the following blogs;