Member Article

Crossrail: Companies save £50m in business rates

Businesses disrupted by construction works for the new Crossrail railway line have won £50 million in business rates discounts and thousands more firms could still claim, according to business rent & rates specialists CVS surveyors.

Evidence from more than 1,000 commercial properties impacted by Crossrail construction works shows that businesses have secured rates discounts of over 20% in many cases, with the average business saving almost £10,000 a year.

Shops, cafés, offices and other businesses affected by the construction works around stations and where other new Crossrail infrastructure is being put in place are entitled to appeal their business rates liabilities. To date, well over 1,000 firms have submitted a challenge, with successful appeals securing an average reduction of 9.6% in their business rates.

CVS estimates that some £35 million has already been handed back to business in refunds or saved in reduced rates bills. By 2017, when new reviewed business rates will come into force, this figure will have reached almost £50 million. CVS believes that thousands more businesses could still be eligible for business rates discounts, potentially generating at least a further £50 million in savings for ratepayers.

The new Crossrail line stretches across 36 stations from Reading in Berkshire to Shenfield in Essex and Abbey Wood in south east London, passing through central London stations including Paddington, Tottenham Court Road, Farringdon and Liverpool Street. Central London businesses in densely developed locations have been most affected by construction works, with the grounds for appeal including disruption caused by access issues, loss of trade, loss of amenity, noise and dust.

David Ford, Regional Performance Director at CVS, said: “Crossrail is bringing a unique boost to London and home counties property markets, but as with all major infrastructure it’s inevitable that there will be some short-term disruption and businesses must be compensated appropriately. Businesses which successfully appeal their rates – be they headquarter City offices or independent Soho shops – are saving an average of almost 10% on their rates, and we have secured reductions as high as 22.5%. By 2017, firms hit by Crossrail will have saved some £50 million, but we think there are potentially in excess of a thousand more businesses that could still appeal and a further £50 million to be saved.”

Business rate appeals are processed by the Valuation Office Agency (VOA). When an appeal is successful, the reduction in rates is backdated to when the business was first affected by any ‘material change of circumstances’ such as Crossrail works. This means businesses often receive a refund, as well as reducing their rates bills for subsequent years.

However, delays in processing appeals at the VOA mean that businesses are having to wait longer to have their cases resolved and overpaid rates refunded. When the VOA published its latest performance data in March, there was a backlog of over 280,000 unresolved business rates appeals.

David Ford continued: “The VOA is under significant resource pressure and ratepayers are facing increasing delays in having their appeals resolved. For Crossrail appeals, ratepayers need to ensure they’re getting the best deal and aren’t being given short shrift. Valuation officers can sometimes offer inferior settlements than ratepayers deserve, so businesses and their professional advisers need to be alive to the significant savings being achieved across the impacted areas.”

Currently, rates are collected by local authorities but set by central Government via the uniform business rate (UBR) – currently 49.3 pence in the pound in England. However, on 5 October, the Chancellor of the Exchequer announced a new wave of devolution which is likely to see councils keep 100% of any newly generated business rates in return for taking on new responsibilities, including the ability to cut the business rate.

To calculate a business rate bill, the business rate (or ‘multiplier’) is applied to a property’s Rateable Value. The Rateable Value is a calculation of a commercial property’s annual rental value on the open market, as assessed by the VOA.

Businesses which fall within the Greater London Authority (GLA) contribute to the cost of Crossrail via a 2% supplement, applied to properties with a Rateable Value of more than £55,000. Ten of the 36 Crossrail stations fall outside of the GLA, namely Reading, Twyford, Maidenhead, Taplow, Burnham, Slough, Langley, Iver, Brentwood and Shenfield.

This was posted in Bdaily's Members' News section by CVS .