Your business rates bill is wrong: what a challenge actually involves
A rateable value is an opinion, and opinions can be wrong. What the Check, Challenge and Appeal process asks of a business, how long it really takes, and how to work out whether it is worth running at all.
Problems, in order · Part of Outsourced General Counsel
Dinmore Bell treats a business rates challenge as a cost recovery exercise rather than a tax question. The Valuation Office runs a Check stage on the facts and a Challenge stage on the valuation, with an appeal to an independent tribunal after it. Expect a year or more, and keep paying the bill throughout.
A business rates bill is not a tax return. Nobody at the council calculated your liability from your accounts, and nobody at the Valuation Office visited to see what you actually occupy. The bill is arithmetic performed on a number in a list, and the number in the list is an opinion of what your property would let for on a fixed date.
Opinions can be wrong. The question is not whether yours might be. It is whether the effort of proving it is worth what you would get back.
What a challenge actually is
It is a two-stage process run by the Valuation Office Agency, followed by an appeal to an independent tribunal. You correct the facts first, then argue the valuation, and you cannot do the second without doing the first.
The service is called Check, Challenge and Appeal, and the sequence matters more than anything else about it. GOV.UK's guidance on how to challenge your business rates valuation is explicit: you must complete a check case before you can send a challenge.
The Check stage is about facts. Floor areas, what is in the building, what has been demolished, what is plant and what is not, what the site is actually used for. It is unglamorous and it decides most cases. A rateable value built on 4,200 square feet of retail when the mezzanine came out four years ago is wrong on arithmetic, and arithmetic is far easier to win than judgement.
The Challenge stage is about valuation. Here you are not correcting a fact, you are proposing a different number and giving the legal basis and the evidence for it. Comparable properties, the actual rents being paid nearby, the trade the property can support. This is where the argument gets expensive, because it needs evidence rather than complaint.
The Appeal stage is the Valuation Tribunal, an independent judicial body that hears disputes on rateable value, completion notices, penalty notices and transitional certificates. You reach it if you disagree with the challenge decision, or if the Valuation Office has not replied within eighteen months.
We have written separately about how a challenge is built and won in a hospitality setting, where the rateable value is derived from assumed trade and the evidence looks quite different.
How long does it take?
Assume a year to two years from start to finish. The Valuation Office has eighteen months to decide a challenge, and an appeal to the tribunal adds to that.
This is the number most businesses get wrong, and it changes the decision. A challenge is not a way of reducing this quarter's cash outflow. It is a claim for money back, decided long after the year it relates to.
Two consequences follow. First, you keep paying the bill in the meantime. A challenge does not suspend the liability, and stopping payment while you argue invites recovery action on a debt you have not yet proved you do not owe.
Second, the value of a successful challenge is not the annual saving. It is the annual saving multiplied by every year of the rating list it applies to, plus the refund of what has already been overpaid. That is why the arithmetic often works even when the yearly figure looks modest.
Is it worth running?
Compare the total refund and the remaining years of the list against the internal time and any adviser fee. A challenge worth a few hundred pounds a year on one site is rarely worth it. The same error repeated across eight sites almost always is.
Three things move the arithmetic in your favour.
Multiple sites. One measurement convention applied wrongly tends to be applied wrongly everywhere. Estates are where the money is, because the same argument runs eight times for barely more work than it takes to run once.
A physical change nobody told anyone about. A demolished section, a mezzanine removed, a yard sold off, a unit split. These are facts, they are provable, and they belong in the Check stage.
A property whose surroundings changed. Long-term roadworks, a neighbouring closure, an access route lost. These affect what the property would let for, and they are exactly the sort of external factor the Check case is meant to capture.
And one thing that moves it against you: a valuation you simply think is too high, with nothing behind that view but the invoice. That is not a case. The Valuation Office is not obliged to be persuaded by dissatisfaction, and a challenge submitted on that basis burns the effort without moving the number.
What Dinmore Bell does with this
Rates sit in our tax reliefs and cost recovery work, and the reason it belongs there rather than anywhere else is that it is a recovery exercise, not a tax opinion.
The first thing we do is look at the whole estate at once, using the Valuation Office's own find a business rates valuation service, which shows the rateable value of a property in England or Wales, the rateable values of similar properties, and how the figure was calculated. That last part is what tells you whether there is a case.
Then we measure. Not from the lease plan, which is often out of date, but from what is there now. Then we assemble the Check case from documents that exist: floor plans, fit-out records, planning consents, photographs with dates on them.
If the facts do not produce a change, we say so and stop. A challenge with nothing behind it costs a client money and occupies a slot they may want later.
If they do, we run the Check, then the Challenge with a proposed alternative value and the reasoning for it, and we hold the correspondence and the deadlines. Where a case needs to go to the tribunal, we take it there.
Throughout, this is one part of a contract and cost estate we already hold. A business with an outsourced General Counsel function does not have to notice the rates problem, brief someone on the property, and chase the outcome. The estate is already documented and the dates are already on a calendar somebody is paid to act on.
Where a specialist is needed
Rating valuation at tribunal level is specialist work, and a complex valuation argument on a large or unusual property is run with a chartered rating surveyor instructed alongside us. We coordinate that instruction and hold the commercial position; the valuation opinion is theirs.
The same applies where the answer turns on tax rather than value. Reliefs, empty property positions and the interaction with corporation tax are matters for chartered tax advisers, and we instruct them rather than opine ourselves.
The one thing to do this week
Look up your own properties on the Valuation Office's service and read how the rateable value was calculated. If the floor areas do not match the building you occupy, you have a Check case, and it is the cheapest money you will recover this year.
Be aware that the process has teeth in both directions: GOV.UK sets out penalties for providing false information in a check or challenge case. The evidence you submit needs to be right.
Dinmore Bell provides an outsourced General Counsel function for founder-led businesses, owning work of this kind end to end rather than advising on it and handing it back.
Common questions
- Do I have to keep paying my business rates while I challenge them?
- Yes. A challenge does not suspend the liability. Withholding payment while the case runs invites recovery action on a debt you have not yet shown you do not owe, so the bill is paid and the overpayment is recovered afterwards.
- How long does a business rates challenge take?
- Plan for a year to two years. GOV.UK guidance says the Valuation Office has eighteen months to reply to a challenge, and you may appeal to the Valuation Tribunal if you disagree with the decision or receive no reply within that period.
- Can I go straight to a challenge?
- No. GOV.UK is explicit that a check case must be completed before a challenge can be sent. The Check stage corrects the recorded facts about the property, and most successful outcomes are decided there rather than in the valuation argument.
- What evidence actually decides a challenge?
- Measurements of what is physically there, plans and planning records, evidence of changes to the property or its surroundings, and comparable evidence of what similar properties let for. A view that the bill feels too high is not evidence.
- Is it worth challenging on a single small site?
- Often not. The value of a win is the annual saving multiplied by the remaining years of the rating list plus the refund of overpayments, so the arithmetic usually works on multi-site estates and on clear factual errors rather than on marginal valuation arguments.
Sources
- 01how to challenge your business rates valuation gov.uk
- 02Valuation Tribunal valuationtribunal.gov.uk
- 03find a business rates valuation gov.uk
- 04penalties for providing false information gov.uk
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