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CORONAVIRUS MEASURES - 27/04

Following the Chancellor’s initial announcement regarding the expansion of the retail relief scheme for 2020/21, the Government has made a series of changes extending the scope of the scheme which now covers a wider range of property uses in the retail, leisure and hospitality sectors.

Friday saw the news that the Confederation of British Industry (CBI) has followed our call last month for the business rates holiday to be extended to all companies, not only those operating in the retail, leisure and hospitality sectors. The CBI is pushing for a holiday of three months – as you will know, in our opinion the crisis is significant enough to warrant the waiving of all rates bills for 2020/21 – but the weight and influence it brings to the lobbying effort is welcomed.

Six weeks on from the Chancellor’s announcement of a rates holiday for retail, leisure and hospitality businesses, we’ve been looking back at the measures we’ve been taking to help our clients reduce their liabilities, and working to identify next moves in these unprecedented times. In our update on 3rd April we covered the latest position on the expanded retail relief scheme and reported on the positive position that the Government had taken on State Aid for this particular measure.

As ever, we have maintained a regular dialogue with the Treasury and MHCLG to ensure your interests are represented in Government decision-making. It is vital that the pressures on business – and impacts of policy measures – are properly understood by the Government, and this is a major element of our ongoing strategic work. We also continue to liaise with the authorities in Scotland, Wales and Northern Ireland; our most recent update earlier this month concentrated specifically on changes in Scotland.

For clients operating outside of the retail, leisure and hospitality sectors, we have been actively investigating other opportunities to mitigate their liabilities in these times. As many of you will be aware, legal advice has been sought on the treatment of properties that are currently not being used as previously due to Government social-distancing guidelines, and we are liaising with you to identify the best approaches for your portfolios. As lockdown continues, we have also been working with many of you to consider situations where Material Change of Circumstances challenges can be submitted. These will be longer-term in scope but offer the prospect of reduced liabilities.

We are also looking at the best way to campaign for additional business rates measures through the media. We have been a prominent voice in the business rates debate for many years and have used this platform to effectively push for a system with lower liabilities and a fairer approach. We are now seeking to ways to use the media to campaign for firms outside the retail, leisure and hospitality sectors, but believe our approach will generate greater media attention if it includes case studies of clients still paying full business rates while their offices and factories sit unused. It is clear that even when the Government relaxes the lockdown restrictions social distancing measures will remain leading to inefficient use of manufacturing and office space. We believe it would be unjust to levy full rates charges in this scenario. If you are interested in putting your company’s weight behind this campaign, please let us know.

2021 Revaluation

As you will be aware from our earlier update the Bill to bring forward the next revaluation date in England to 1st April 2021 was given its first reading in the House of Lords on 18th March. The second reading was scheduled for this Wednesday but this has now been postponed with a new date yet to be announced.

As the lockdown continues the expectation of rates bills in 2021 based on property rental values and economic circumstances in April 2019 will raise many challenges.

The Bill is a slimmed down version of that which was before parliament prior to the election but failed to reach Royal Assent and deals only with the date of the Revaluation. The previous Bill included measures to allow for three yearly revaluations after 2021, reflecting ratepayer demands for increased frequency to avoid the disconnect between property values and rates bills. We argued at the time that the legislation should allow flexibility and continue to call for amendments to allow revaluation periods of no longer than three years, thus permitting annual or biennial revaluations without the need for fresh legislation. We believe it is also key to reduce the two-year gap between the valuation date (the antecedent valuation date or AVD) and the date of the revaluation. The likely enormous changes in the economy between April 2019 (the AVD for the 2021 revaluation) and April 2021 bring this into clear focus.

The current Bill excludes provision for shorter future revaluations as the Government intends to await the outcome of the Fundamental Review launched by the Chancellor at the Spring Statement. Terms of reference were published by the Government on 11th March.

The review timetable was to publish a call for evidence in spring 2020 with a view to reporting by autumn 2020, but there must be a chance of this slipping due to parliamentary pressures of Covid-19. Indeed, given the postponement of the proposed second reading of the Bill, it is possible that there will be insufficient time for it to conclude its passage, in which case the default is that the next revaluations in England and Wales would be in 2022 – which is when the next revaluation in Scotland will occur.

These are extraordinary circumstances which are likely to remain far from ‘normal’ for some time to come, but we want you to rest assured that everyone in Gerald Eve’s rating team is dedicating their unrivalled expertise, insight and experience towards seeking the concessions, reliefs and policy changes that will help you navigate the months ahead.

Please do not hesitate to contact us should you require more information.

Key Contacts

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Simon Green

Partner

Alan Hampton

Partner

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