Planning the annual budget is a critical balancing act which every school leader always faces – so any opportunity to augment finite (financial) resources is usually very welcome.
Business rates is one of those fixed costs which, usually unchallenged, appear in every annual financial plan. However, a growing number of schools are challenging their rating assessments (rateable values) received from the Valuation Office Agency (VOA).
Three schools which did successfully challenge their assessments secured an annual average saving of £40,000.
Holywell High School in Flintshire saw its rateable value reduced from £193,000 to £150,000, Connah’s Quay High School in Deeside saw a reduction from £243,000 to £204,000, and Aintree Davenhill School in Aintree from £55,000 to £43,250.
So how does the VOA determine a school’s rateable value? Assessments represent a percentage of the construction cost of the property. A standard template calculation is used to value schools. However, the assessment sometimes does not reflect a school’s unique combination of accommodation, occupancy patterns and land use.
Unless your local authority has notified the VOA of any change in a school’s circumstances – which ensures that the details of the VOA’s factfile is correct – it is possible that the school will not benefit from allowances which could reduce their business rates bill.
Allowances which could be applied include the following:
Staff parking: Is there enough staff parking, or do some people have to park outside the school grounds. This could result in a reduction of your rates bill.
Playing fields: Are your playing fields part of the main school footprint, or are they a short walk away – requiring pupils to be marshalled there for sports lessons? This could entitle you to claim an allowance. Or has part of the playing fields been released or sold and therefore are now used for other purposes? Unless the VOA has been notified, this area may still be included in your valuation.
These are just two examples of why it makes good fiscal sense to check and if possible challenge your rating assessment.
With the VOA currently undertaking a revaluation of commercial properties (scheduled to come into effect in the 2021/22 financial year), now might be a good time to check how your valuation was arrived at.
This can be done by a three-step process known as: Check, Challenge, Appeal.
Prior to commencing the “check” process, the rate-payer must register on the VOA portal to request a detailed valuation of their property. There are of course in-built steps in the process to ensure that you are authorised to obtain this information.
Having registered with the VOA, you will receive details of how your rateable values are calculated – this allows you to identify potential opportunities to reduce your overall business rates liability.
At this stage, it may be appropriate to seek advice from a business rates specialist with experience of the educational sector. He/she will be able to develop a tailored strategy to help you challenge your school’s rateable value and to identify specific allowances which can be negotiated.
Having received the check decision notice from the VOA, you have four months to challenge the valuation. It is important to know that this challenge can only be made once, so if for whatever reason it fails you will not be able to make any subsequent challenges on the same grounds. Therefore, preparation of the supporting documentation and statements has to be flawless – a task which can be delegated to your appointed agent.
If the VOA rejects a challenge (in part or in full), your appointed agent may still recommend there are grounds for an appeal to the Valuation Tribunal: this must be done within four months of the challenge decision.
Many schools we advise had previously been unaware of either the process, or the benefits of challenging a VOA assessment – but they celebrated the outcome, when they were successful.
- Mark Paterson is a business rates (education) specialist with Matthews & Goodman.