‘We have had no input into the decision whatsoever’
In a move that has been described as ‘grossly unfair’, the DIY giant B&Q has claimed back more than £400,000 in business rates on its Tunbridge Wells superstore.
Under a complex process sometimes conducted behind closed doors, B&Q has been appealing against business rates to claw back money.
The store, situated in Longfield Retail Park, has seen the rate it has to pay retroactively revised downwards, entitling it to the refund and lower rates in the future.
The Times understands that two weeks ago the store was handed £430,000. Of this, 40 per cent had to be provided by the borough council, while the remainder is largely the liability of central government – a small portion is provided by Kent County Council and Kent Fire.
This means that £172,000 has come from the borough council, almost enough to run the Assembly Hall theatre for a year.
A B&Q spokesman told the Times: “The building was wrongly valued by the Valuation Office, meaning the rate adopted per square metre was higher than comparable units.”
However, some members of the council have reacted strongly to what they describe as the secretive way in which the DIY chain and the Valuation Office Agency (VOA) have gone about agreeing the reduction.
“The residents of Tunbridge Wells have been mugged,” said Cllr Paul Barrington-King, Portfolio Holder for Finance and Governance, adding: “The council had no input into the decision whatsoever.”
His view was echoed by the council’s Director of Finance and Corporate Services, Lee Colyer, who said that while re-evaluations were not uncommon, he was ‘surprised’ by the scale of the reduction which he said ‘came out of the blue’.
Mr Colyer said: “Because I like to protect the council taxpayers’ interests, I enquired about the reason for the reduction and was quite surprised to be told it was confidential.”
He said standard practice for large units is the process of re-evaluation. This goes through a tribunal stage, which takes place in London and allows third parties to observe the decision-making progress between the store’s agents and the VOA.
But this stage was never reached, and instead the decision to lower the rate was taken during a ‘private meeting’.
“I am guessing that the meeting would have been attended by B&Q, certainly their agents, and a member of the VOA,” said Mr Colyer. “In that meeting they decided to lower the rateable value back to what it was in 2005.
“So you could say the owners of the property are very happy, the agents are very happy as they earned their commission, and the VOA… well they have cleared up another appeal. But the taxpayers were shut out of that process.”
When asked by the council for the reasoning behind the decision, the VOA simply obfuscated and refused to release any information, leaving the council scratching its head as to what lay behind the settlement.
“I am not questioning their professional judgement, but it does matter because for us that Longfield Road area is hugely successful,” said Mr Colyer.
He said there had been reports that the John Lewis store on the business park was one of the most profitable in the country, indicating high levels of footfall in that location.
Strong economic activity in the area was part of the basis for the £7.3million dualling programme for Longfield Road, in order to enhance existing capacity, and this was on top of the huge £70million being spent on improving the A21.
“If the reduction is due to the perceived level of economic activity in the area, then I have concerns,” said Mr Colyer.
“It appears the officers at the VOA have the power to make key decisions on substantial refunds worth six-figure sums autonomously.”
He added he would have no issue if they are making refunds in the thousands or tens of thousands of pounds, but would have expected them to have a far more open and transparent system for dealing with larger cases.
What matters just as much as the one-off payment is – moving forward – the rateable value of the building will be less, meaning taxpayers also lose out in the long run to the tune of thousands of pounds a year. This is at a time when the council’s budget is being squeezed by central government cuts to its grant.
The shortfall resulting from the cuts was supposed to be made up from ‘sharing the proceeds of growth’ and letting the council retain a larger share of the business rates it collects.
Instead, the rateable value has now been lowered from £1,800,000 per year, set in 2010, to £1,510,000, a level that was last seen in 2005.
It is a reduction which led Mr Colyer to openly question how the VOA had got the 2010 rating ‘so wrong’ in the first place.
A VOA spokesperson said: “We don’t comment on individual cases. If a ratepayer believes their rateable value is incorrect, they can contact us.
“If, once we have looked at the facts of the case, we agree a new rateable value with the ratepayer, then the case is considered settled and will not progress to a tribunal hearing.
“Where we can, we provide access to information on our website, but – due to taxpayer confidentiality – we are often limited regarding what we can disclose to third parties, such as local authorities.”
A B&Q spokesperson commented: “The building was wrongly valued by the Valuation Office, meaning the rate adopted per square metre was higher than comparable units. The building was also wrongly assessed as having an air-conditioning system.”
In response, B&Q requested that its valuation be brought in line with the correct rate for the property type.
The Valuation Office accepted B&Q had been overpaying for the last six years and the rateable value was revised downwards, and backdated to 2010.”
WHO ARE B&Q?
Originally named Block & Quale, B&Q is the fourth largest DIY chain in the world and is run by parent company Kingfisher.
Founded in 1969, fierce competition within the DIY market has taken its toll on B&Q in recent years, leading Kingfisher to announce plans to shut 65 stores as part of its plans to turn around the chain. So far, 52 of the planned closures have gone ahead.
WHAT ARE BUSINESS RATES?
Business rates are charged on most commercial properties and are a statutory tax levied by central government. They are collected locally by the council. Forty per cent of the money collected is retained by the council. This income, together with money from council tax and the Revenue Support Grant from central government, is used to pay for the services provided by the council. Rateable values of commercial properties are normally revalued every five years.