NON-DOMESTIC RATING ACT 2023 Mandatory business rates compliance obligations imminent - Are you prepared for the change?

Helen Gelsthorpe

Helen is an Associate Director and has over 14 years of experience working in the Business Rates Team within Avison Young’s Leeds Office. She deals with a wide variety of property portfolios on behalf of both commercial and public sector clients. She specialises in advising NHS Trusts, blue light organisations and local authorities.

This article is based on an Avison Young “Espresso Briefing” webinar Helen and her colleague Claire Paraskeva recently gave on this topic. Thanks to Helen for agreeing to write this follow up article. The 2023 Act puts onerous obligations on ratepayers which practitioners need to be aware of: “they represent a seismic shift in the administrative framework of business rates and a first step towards self-assessment.” 

In their pre-election manifesto, the Labour party claimed it would replace the business rates system in order to level the playing field between the high street and online giants, and to better incentivise investment; however, the autumn budget implied that there will simply be further reform of the current system. 

One of the most significant reforms is the introduction of a new ‘Duty to Notify’ via the Non-Domestic Rating Act 2023. The legislation became law in October 2023 and sets out several changes to the business rates system, some of which will fundamentally change the way that ratepayers manage their businesses. 

The legislation will require all ratepayers to notify the Valuation Office Agency (VOA) of any change to a property they are responsible for within 60 days of the change. This includes any change to a property, tenancy or usage that affects rental value (or trade if the property is valued with reference to its receipts). 

Events requiring reporting could include: 

• Physical changes 

• Addition of plant and machinery 

• Property vacancy or new occupation 

• Lease modifications including rent reviews and lease renewals. 

In addition, the Act introduces a duty to provide annual confirmation of the current information held by the VOA within 60 days of 30 April each year. This duty will apply to the ratepayer, or those who should be a ratepayer in cases where their property is not yet assessed, or their rateable value is zero. 

The legislation is already in place but is subject to commencement provision; and the government has recently set out the timeline for launching the Duty to Notify obligations (see image). 

Non-Domestic Rating Act 2023

It is intended that implementation will commence from 1 April 2026, but the rollout will be phased to ensure that it is adequately tested. The duty will be formally activated and mandated for all ratepayers by 1 April 2029. There will be penalties for failure to comply within the timeframe or for the provision of false information: 

• False data offences carry a maximum penalty of 3% of the rateable value plus £500. These penalties are applied per instance, so the VOA can issue multiple fines on a single assessment 

• The VOA is also able to backdate increases in rateable value which stem from correcting false data provided by ratepayers 

• If a ratepayer fails to comply with the duty to notify requirements, they will be precluded from Challenging their rateable values or requesting any valuation information from the VOA. 

While it has been confirmed that these penalty notices will not be issued until it is sufficiently straightforward for ratepayers to comply with the new obligations, there are already penalties for supplying incorrect information in a proposal to alter the rating list. 

Alongside the duty to notify, a new digital gateway will be introduced to support data sharing between HMRC and billing authorities, as part of the government’s wider plans to link tax and property data. The aim is to provide central and local government with a more holistic view of businesses and to facilitate a more targeted design of business rates relief schemes in the future. 

The Bottom line 

It is hoped that the new obligations will increase the quantity and quality of evidence used to derive valuations. However, they represent a seismic shift in the administrative framework of business rates and a first step towards self-assessment. The onus to provide information will be transferred to the ratepayer, and business rates will be brought more in line with the compliance requirements of other business taxes. 

Property owners and occupiers will need to ensure that they have systems or a designated person in place to comply with these new requirements. This could be a sizeable task, and professional expertise will be required to ensure you are compliant and avoid penalties. 

How we can help

Avison Young is the leading provider of business rates advice to the public sector in the UK. We have an outstanding reputation across central government, local authorities and the NHS, and we pride ourselves on our longstanding relationships. Our highly skilled team of rating experts can advise you on how to prepare for and deliver on your compliance obligations, saving you time and creating peace of mind. 

If you would like to know more, please get in touch.