On top of the many challenges pubs are facing right now, the time has come again to getting a new rateable value on which your business rates are based. Although there was welcome news in the Autumn statement that the existing 50% business rates relief is being extended, and further increased to 75% relief for hospitality & retail businesses, you need to keep in mind the full value you will need to pay when this support comes to an end.

For many pubs the new valuation should be lower to reflect the difficult trading environment in recent years, however this won’t always be the case, particularly if you have successfully challenged your rates before. 

We look at why you may need to challenge your business rates and how you can go about it. 

We are not qualified to give legal advice but have been through the process ourselves so are sharing information based on our own experience. 

It’s worth noting that this article is written specifically about pubs. For other hospitality businesses, rates are calculated differently and much of the below may not apply. 

How are rates calculated?

The rateable value for your venue is calculated based on the valuation office’s assessment of its fair maintainable trade (FMT). FMT is the trade that a reasonably efficient operator could achieve at the venue. 

Why challenge?

Apart from the obvious reason, that you want your rates to be as low as possible, there is another very good reason why you may want to challenge your rateable value - you are performing better than a reasonably efficient operator, and therefore exceeding FMT. 

The valuation office doesn’t have the time or resources to calculate FMT for every venue in the country, so the initial valuation is based on your actual trading figures. If you are performing better than FMT for any reason (see below) then by default you will get penalised for your success and be charged higher business rates. 

Frustratingly, even if you have successfully challenged your business rates previously, the information previously provided seems to be ignored in the new assessment and you are defaulted back to a rateable value that assumes your actual trading figures are FMT for your venue. 

Why might you not want to challenge?

If you believe your business is performing on a par with FMT, or even worse than FMT you may not want to challenge your rates. Not only could it end up being a waste of time and effort, but if you have already been given a fair or even a low rateable value, there is a chance that a challenge could lead to it increasing. 

How to challenge?

Challenging your rates can be a long-winded process. You first need to send a “check case” to confirm your property details are correct (or inform of any change). 

Changes to inform the valuation office of at this stage are material changes affecting the properly either internally (e.g. it’s been split into two different properties) or externally (something has changed in the area that has a major detrimental impact). 

If you’re making a challenge on the basis of your business exceeding FMT, the check is just a necessary step you need to take before you can make a challenge. 

The challenge 

Once you have a response to your check, you will be able to make a challenge. This should be able to be initiated from the website, but in the event this doesn’t work (as in our case) you can request a form from the valuation office. 

The form asks for various details, but the key questions are what your proposed rateable value is and why you think it should be altered. You can also provide supporting evidence. 

We are experts on hospitality technology and if you are ever looking to improve your business through a tailor-made pub EPOS system get in touch, we’d be very happy to hear from you.