G166. Maintaining the yield is not just about recovering any losses that occur. It is also about minimising the level of those losses. This is principally achieved by ensuring that valuations are, as far as possible, acceptable to ratepayers in the first place. Obtaining the relevant information is also essential to minimising losses during the appeal process. This would ensure that valuation officers and valuation tribunals would be able to base assessments on comprehensive data on rents paid or other value-significant information such as accounts and building costs.
G167. The VOA already endeavours to achieve this and the evidence so far suggests that the quality of valuations has been improving over the three successive revaluations since 1990. During Revaluation 2000 the VOA did much work to improve the collection of information, working with ratepayer groups. However, there is scope for further improvement.
G168. This would be facilitated by a better flow of information between the VOA and ratepayers during and before the revaluation process. The section above on lessons to be learned from Revaluation 2000 considered the establishment of ratepayer panels, to improve the flow of information as part of the revaluation process. By leading to valuations which were more acceptable to ratepayers, this process should also help to maintain the yield by reducing the scope for and extent of appeals.
G169. Forms of return (FORs) are currently the main source of rental evidence that Valuation Officers require to compile and maintain valuations. They are sent to selected ratepayers, generally in advance of each revaluation, in order to gain information on actual rents set around the valuation date, on which to base valuations. However, many of the FORs are not returned, so the VOA is not getting as much information as it would like. The rate of return for Revaluation 2000 was around 50%.
G170. The House of Commons Treasury Sub Committee, in its report on the VOA of 28 October 1999, recommended "that the full and accurate completion of "forms of return", which is required of all non-domestic ratepayers so requested, should be enforced more stringently and that the fine payable on conviction of failure to comply be raised significantly".
G171. This review therefore considered whether the rate of return of FORs could be improved, in order to improve the quality of valuations carried out by the VOA. The main suggestions canvassed were the introduction of incentives, to encourage submission; and the replacement of a criminal sanction with a civil fixed penalty system. This was seen in the wider context of an improved dialogue and exchange of information between ratepayers and valuation officers, as part of the revaluation process.
G172. The VOA currently has difficulties in ensuring that FORs are completed and returned to them. The only sanction they have available at present is a criminal prosecution, which is impractical to pursue and heavy handed. A more practical and effective alternative may be a civil penalty for a failure to return, which might be £100, £1000 or some other amount. Such a system is already in use for income tax returns, although such returns are directly related to the amount of tax paid, whereas FORs are only for the VOA’s information. An extension of the reply period, perhaps to 56 days, would also help ratepayers and their agents complete the forms and may mean more are returned.
G173. The use of incentives for return of FORs has also been suggested, though not any particular incentives. It is hard to see what would induce a commercial ratepayer or, more likely their professional rating agent, to return a FOR when they do not do so already.
G174. 15 respondents to the consultation paper supported the use of fixed penalties, 7 supported incentives and 5 favoured the current system. 5, mainly from the rating profession, suggested that the maximum period for submission of a FOR should be increased over the current 21 days. This was to reflect the fact that information may not be readily available in the form requested by the VOA and forms will often be passed to agents for completion. 9 respondents also called for the VOA to review its information requirements and simplify the forms. Some respondents felt that fines should only be used if FORs were sent to all ratepayers.
G175. The VOA intends to work in a more collaborative way with ratepayers on future revaluations, building on the work already done for revaluation 2000. A major innovation would be to establish ratepayer panels for different classes of property, at national and local levels. These panels would provide a conduit for the flow of information needed to undertake valuations and will help the VOA to get across the message that it is in ratepayer’s interests to complete and return FORs, as that will in turn lead to more acceptable valuations. In the other direction, it will help the VOA to tailor its requests for information in a way that ratepayers will find easier to answer. For example, it may be possible to make more use of information available for other purposes or in other formats.
G176. One suggestion has been the use of ‘boomerang’ forms, which are sent out to ratepayers part completed by the VOA with the information they already have, asking the ratepayer to update it or add missing information. This may be more likely to encourage ratepayers to complete and return the form, but raises confidentiality concerns if, for example, the VOA is not aware of a recent change of occupation and inadvertently sends information to the wrong person.
Conclusions
G177. The review group concluded that a move to civil penalties for non-return of FORs provided a much more practical and effective enforcement mechanism and should be adopted. However, it should still be seen as very much a last resort and placed in the context of improved co-operation and flow of information between ratepayers and valuation officers, as part of the valuation process.
G178. Further work will be done to ensure this takes place in the run up to the next revaluation. Detailed application will depend on decisions taken on the issues considered elsewhere in this paper on revaluation cycles and in the timetable for the revaluation process itself.
G179. The review also concluded that work should be undertaken to consider the potential for developing the existing Particulars Delivered (PD) system, where details of most capital and rental transactions come to the attention of the VOA, to provide some of the information at present collected separately as part of the NNDR valuation process. Research should be done into whether this would be practical and its potential for improving the provision of information and reducing the burden on business.
[ Annex G Section7 ] [ Contents ] [ Annex G Appendix 1 ]
Published on 19 September 2000
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