Gerald Eve achieves sky high savings for London’s busiest airport

Heathrow Airport Ltd (HAL) is one of the UK’s largest business ratepayers. Not only is the airport subject to the largest single rating assessment in the UK of £247.5m, it is responsible for around 200 other assessments on its 1,227ha site that amount to a combined liability of approx. £130m.

It is a large and diverse estate, constantly changing and evolving to meet the demands of international passenger travel, airlines, changing aircraft design, and customs and security regulations. Business rates have become the airport’s second-largest operational cost, and in 2009 HAL turned to Gerald Eve to help ease the financial burden as well as provide greater certainty in forecasting their future liabilities.

Our response was to set up an on-site business rates management team of specialist surveyors, working as an integrated part of HAL’s operational structure at the airport. Their first task was to audit what rates HAL was paying and what their liability was, working proactively with both the Valuation Office Agency (VOA) and London Borough of Hillingdon to establish the facts and develop a working model for assessing HAL’s liability accurately on a day-to-day basis.

The team has grown to five people with specialist knowledge, supplying a comprehensive business rating service that has included historic rates auditing, rates payment and accounting, and negotiation of valuations with the VOA. We’ve made advanced preparations for the 2017 Revaluation, supplied technical and rates advice regarding on-site tenancies and retail concessions, and provided financial forecasting and annual reporting to the CAA and Department for Transport in relation to the quinquennial regulatory period that ends in mid-2019. We’ve also represented HAL’s interests on business rates reform to trade and political bodies such as the CBI, Airport Operators Association and the Department for Communities and Local Government.

Our ongoing mitigation of HAL’s rates liability has led to refunds totalling around £35m over five years, and savings against budget up to 2017 estimated to total around £26m. HAL now have something else, just as valuable: a clear, focused and accurate budget and forecast of rates liability – something they didn’t have prior to our appointment.

If you’re in the Airport or Aviation business and you’d like more information, or if you’d like to talk about reducing your business rates burden, email our high-flying specialist Simon Butler.

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