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 insurancethe
actual lease may be on the basis that the landlord covers all
or part of these, and if so, the rent will be proportionately
(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 www.voa.gov.uk
by entering the relevant postcode. In addition, HMRC analyse the
VOA data and publish aggregates as National Statistics on the
HMRC website http://www.hmrc.gov.uk/stats/non_domestic/menu.htm.
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