Pub Companies - Business and Enterprise Committee Contents

Memorandum submitted by HMRC Board London

  All non-domestic properties are revalued by the VOA every five years. The last revaluation was effective from 1 April 2005 with a base valuation date of 1 April 2003. A revaluation is currently underway and will be effective from 1 April 2010 with a base valuation date of 1 April 2008.

  The basis of valuation is rateable value, which represents the VO's estimate of the rental value of the property as at the relevant valuation date.

  When considering the valuation of pubs and other leisure properties, in addition to rental data, the VO usually needs to request information about the business, such as trading receipts, in order to be able to gain an understanding of the level of fair maintainable trade. This is a factor that influences rental values that businesses pay to property owners and so also affects rateable values in these property classes.

  Rental value still underlies the basis so it is possible for individual pub occupiers to reflect on the correspondence of the rent they are paying and the rateable value that has been assessed. However, there are certain factors that need to be considered when doing this since it is quite possible that the basis of the rent is at variance with the assumptions used for the purposes of determining rateable value (RV):

    (1) For rating an open market lease is assumed, free of any tie in respect of liquor products supplied by the landlord. The majority of pubco leases are subject to a tie of some degree or another. In theory the rent passing should be reduced to reflect this restriction on the publican's business model.

    (2) RVs assume a lease under which the tenant is responsible for all repairs and property insurance—the actual lease may be on the basis that the landlord covers all or part of these, and if so, the rent will be proportionately higher.

    (3) RVs relate to the value of the non-domestic part of the property only (ie living accommodation is excluded). Most pubs are rented with the living accommodation above included.

    (4) RVs depend on the accuracy of the trading data in the possession of the VO. Forms of return requesting up-to-date trade are sent to every occupier in advance of each Reval, although many are not returned in part due to rapid changes in the occupation of some pubs.

    (5) RVs relate to a single valuation date on a five-year cycle, the rent may be out of step with this.

  With the 2010 revaluation, for the first time, the VO will be sending individual pubs the breakdown of their rateable value assessments. This will be done six months before the values come into effect in order to give people the opportunity to check the details held and raise any queries if necessary. The intention is for everyone to be assured that their rateable value is accurate and that they have been treated fairly.

  Whilst it is not possible to release confidential taxpayer details, information on the rateable value of individual properties is available on the VOA website at by entering the relevant postcode. In addition, HMRC analyse the VOA data and publish aggregates as National Statistics on the HMRC website As of the beginning of April 2000 there were 61,000 pubs and wine bars in England and Wales with an aggregate rateable value of £1,311 million. As of the beginning of April 2005 there were 66,000 pubs and wine bars with an aggregate rateable value of £1,667 million. Comparisons with rental trends over time are problematic as these need to reflect the different characteristics of the pubs being considered, as well as the impact of other factors affecting individual pubs between revaluations, such as increased competition, refurbishment, etc.

11 March 2009

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