The property tax on business occupiers known as ‘business rates’ is currently undergoing a major review as part of the national 2010 Rating Revaluation. The result could be that some golf course and driving range operators will be faced with increases well above inflation.
Business rates form a significant percentage of annual outgoings – a typical 18 hole proprietary golf club may pay between £25,000 and £45,000 in rates each year.
The Valuation Office Agency (‘VOA’), an executive agency of HM Revenue & Customs, has the responsibility of allocating all qualifying non-domestic properties with a ‘Rateable Value’ and this coupled with the annual ‘Multiplier’ determines the annual rates bill.
The VOA is busy collating information from golf courses and driving ranges on annual turnover for each of the last three years together with property rents paid to landlords.
UK golf property expert, Mark Smith of Smith Leisure, who currently advises many of the country’s leading golf operators on how to minimise their annual rates bills explains, “Many golf operators will have received a statutory notice from the VOA asking for quite sensitive information on a venue’s trading performance and the terms of any rental deal with a property landlord which I am sure most were reluctant to release.
“Unfortunately legislation has now been tightened so that recipients of such notices have little alternative but to supply the information otherwise they are liable to the civil penalty of £100 for non-return within 56 days. This sum in itself is not a major financial penalty however the fine soon escalates to £20 per day until the information is supplied.”
The VOA is collating this information so that it can calculate new Rateable Values to take effect from 1st April 2010. A golf property’s Rateable Value in theory is meant to represent its hypothetical annual rental value for the land, course and buildings even if the venue is freehold with no rent payable.
Mark Smith commented, “The VOA has a statutory duty to maintain a ‘fair Rating List’ but there will always be winners and losers. As well as some individual properties seeing substantial rises I can foresee some regions suffering from larger than inflationary increases but hopefully in the main most should be okay.
“It is important that operators seek advice to make sure that their annual bills are minimised. Rates rebates can be substantial – I have often achieved rates rebates on an operator’s golf property at anything between £10,000 and £50,000 over a five year period and sometimes significantly more.”
Mark Smith can be contacted at firstname.lastname@example.org.
Valuation Office Agency www.voa.gov.uk