A 12-month battle over 2010 Business Rates, during which more than 2,000 fuel retailers lodged appeals, has resulted in some notable triumphs for the lobbying team led by RMI Petrol and, most importantly, for the industry.
Almost a year to the day since Brian Madderson was made chairman of RMI Petrol, he has been able to announce some "very good reductions to rateable values, which will be of real financial benefit to the industry".
The savings have been calculated at around 10-25% per site for a large proportion of the UK network. The announcement came following a meeting last month at the Valuation Office Agency (VOA) HQ in London, where changes to the 2010 Petrol Filling Station (PFS) valuation scheme were revealed.
The meeting followed a long campaign to address the inequitable nature of the Business Rates scheme for the fuel retailing industry, which threatened to put at least 5% of forecourts out of business by 2015.
The figures were contained in a report published last May by property agents Barber Wadlow, engaged by RMIP to assist in the Business Rates challenge. Partner Adam Wadlow said at the time: "There is huge inequality for forecourts; that’s why we urgently need to have a review. We think the entire methodology and assessment framework needs to be changed."
A few months down the line and significant progress has been made, according to Madderson: "Changes to the fuels assessment can be considered a very good result with assumed margins reduced and downward adjustments being made for customer account volume.
"Additionally, sites with high bunker activity will also see good savings both on the forecourt and in the shop."
Madderson said the forecourt shop will also benefit from savings with the Conversion To Rent (CRT) factors being lowered, especially for sites with turnover in the range £500,000 to £800,000.
"However, there is still much work to do: proposed amendments to the scheme for disproportionately high shop turnover have not been accepted yet by the VOA on the grounds that insufficient evidence has been provided. This stance has been and will continue to be contested.
"At present the PFS sector will remain penalised in comparison with standalone c-stores because of the VOA’s approach to value."
Back to the positives, and car wash machines will see good savings at the lower end of the turnover range (sub £20,000), which will equate to a 50% reduction, according to Madderson.
"There will be savings in the region of 15-25% for higher turnover machines, plus if there are multiple machines there will be further savings. Jet washes will see a reduction of 15%, but adjustments have not been obtained for low turnover machines. The VOA has not incorporated a cap and the reduction for multiple machines is inappropriate. These latter changes proposed by the agents would have limited effect on the whole scheme but they would have been welcome."
Madderson feels the 2010 Valuation Scheme is now certainly fairer than before and fits better with the market approach to value, but it has not yet proved possible to persuade the VOA to amend what is now a performance-related tax on the shop element.
"This is disappointing as the forecourt shop is becoming such a key area of profit contribution for survival. Possibly the VOA concluded that it had given the industry most of the amendments and changes and this shop proposal was just too radical and expensive at this stage. The positive realised by the challenge has been that the pressure created by incorporating the shop adjustment helped secure a lot of the other changes.
"Going forward, industry will formally agree to disagree with the final 2010 scheme and use the appeal process to gain further savings. Indeed, the total savings could be very high where there is the ability to successfully appeal reductions as a result of inaccurate information and material changes in circumstances to the trading environment.
"The shop assessment is not fair and the rating differential with standalone c-stores will become increasingly anti-competitive as the sector evolves and more PFS shops are expanded to c-stores. The agents will certainly be trawling the market for any useful new rental which supports their argument and the VOA has confirmed that they are willing to review such information as presented."
The UK petrol-retailing industry has three sectors: independent retailers, oil companies and supermarkets. In negotiations with the Valuation Office Agency (VOA), these sectors had appointed Barber Wadlow, MUA Property Services and GL Hearn respectively as their ratings advisors. Political lobbying by RMI Petrol and individual site owners through their constituency MPs, during the year culminated in a cross-industry presentation to Bob Neill MP, Minister at the Department for Communities and Local Government in July.
Additionally several reports and new rental evidence were submitted to the VOA and the agents continued negotiating dialogue with their petrol filling station team. As requested by the Minister and agreed by the VOA, the agents made a final proposal incorporating all the amendments needed for the 2010 scheme to become acceptable.
Finally, the VOA committed to meeting both the agents and the industry representatives on Friday, November 19, at their London head office to review their findings.
Non-Domestic Rates 2010 Revaluation - valuation scheme for PFS
Provided new software is available, the VOA plans to start implementation of the revised scheme this month for England and Wales. RMIP believes this is likely to involve the following:
l Where there is an outstanding appeal, the ratepayer or agent, as appropriate, will be provided with a revised valuation and an agreement form and invited to agree the revised rateable value (RV). Appellants and their agents will be afforded a brief period of time to agree the level of reduction, if they cannot accept the initial VOA revision. If full agreement cannot be reached, an interim reduction will be given, thus preserving the rights of the original (and any future) appeal(s).
l Where there is an outstanding appeal, the ratepayer or agent will be provided with a revised valuation and an agreement form, and invited to agree the revised rateable value.
l The VOA will write to all ratepayers providing a copy of their revised summary valuation whether their RV has changed or stayed the same.
l If the RV has been reduced, the alteration will be backdated to April 1, 2010. Should any RV increase, this will generally apply from the date the alteration is made. However, if the increase is partly due to a physical change to the property or the locality after April 1, 2010, the alteration will be backdated to the date of the change.
l As Transitional Relief (in England only) may apply, a reduction in rateable value may not have an immediate effect on rates liability.
l The VOA plans to complete the implementation of the revised scheme by March 31, 2011. However, in most cases, changes to rating lists are unlikely to be made in time for billing authorities to base their bills for the next financial year (2011/12) on the revised RVs. It is assumed that billing authorities will issue the new bills as soon as possible once they have been notified of the change.
l Responsibility in Scotland lies with the Scottish Assessors Association and RMI Petrol has made contact to understand how they will implement these changes.