How much income tax should you pay? The question is not about the tax rate but the accuracy of the amount.
Should HMRC take from you a sum which, plus or minus a margin of error, reflects your earnings, investments and reliefs? Or should your contribution be an accurate assessment? Why settle for anything less than accuracy? We are talking tax. You have a responsibility to pay what is due, and the state has no right to receive any more. Accuracy matters.
Business rates have become the tax we love to hate. A principal reason for this is the imminent revaluation of rateable values. On 1 April 2017 business occupiers will be assessed on values as at 1 April 2015, the first updating of rateable values for seven years.
Inevitably, there will be significant changes to the rateable values of some premises. There will be winners and losers. For some rate payers there will, under a current government proposal, be a sting in the tail. The accuracy of the amount of rates payable is under attack. The proposal is wrong and that’s why there is push back.
You may be reading this column in an office or cafe. How much rent does the tenant pay? The answer will be a figure, £X per annum. What is the rateable value? The answer will be another figure, £Y. A rateable value is a variety of rental value. It is the Valuation Office Agency, part of HMRC, which assesses rateable values. The valuation officers compile their findings in rating lists. The duty of a valuation officer is to maintain an accurate list. That is important because rates are a tax. Ratepayers should have to pay an accurate amount of tax. The government is thinking of scrapping that.
Ratepayers have the right to challenge a rateable value. If the ratepayer is unable to resolve with the valuation officer a dispute about the accurate rateable value, it can appeal to the Valuation Tribunal. The Tribunal has over 250,000 unresolved appeals against the rateable values which came in seven years ago. It is a vast backlog. So the Department for Communities and Local Government (DCLG) has proposed a new method for dealing with challenges to the rateable values that will come into force on 1 April 2017.
The proposals include a trap at the end of the appeal process. Accuracy is to be abolished. If the tribunal finds that the rateable value compiled by the valuation officer is wrong, it will not be able to substitute the accurate figure that it has determined, unless the valuation officer’s number was outside the bounds of reasonable professional judgment. Where a ratepayer has persuaded an independent tribunal that the rateable value is too high, the tribunal is powerless to do anything about it; unless the valuation officer went outside those bounds.
Not only is accuracy abandoned, but DCLG has not given any guidance as to what the bounds of reasonable professional judgment means in this context; wrong method, plus or minus 5, 10 or 20 per cent? Ratepayers will be the only losers because it is the valuation officer who assesses the number to begin with. They will be left having to pay too much.
That is why Berwin Leighton Paisner has written on behalf of the leading property industry bodies to a parliamentary committee and to DCLG making the case that the current proposal is unlawful and inadequately drafted. We have argued that the minister has no legal power to abandon the principle that the rating list must be accurate.
Government has not made a final decision; fairness demands this proposal is dropped.