What’s your Liability?

First published in the April 2023 issue of Quarry Management

Gerald Eve warn of expected increases to business rates bills

Quarry operators have been saddled with increased operational costs, especially since red diesel was prohibited from being used in quarrying operations in April 2022. The steep increase in fuel costs has been a huge blow to quarry operations but, come 1 April 2023, operators will also have to contend with increasing business rates liabilities.

Preparation is key to ensure your rates bill is both fair and reflected accurately in your budgets for the next financial year.

Urging all operators to strive to fully understand the breakdown of their business rates liabilities, Simon Atherton, head of minerals and waste at Gerald Eve, said: ‘This is the only way to ensure that what you are paying is fair. Inaccuracies in the rating assessments for your properties could mean you are paying too much or even too little. Too much and you could be owed a potential rebate, too little and you could be struck with a corrected bill that you may not have budgeted for.’

The revaluation date for the 2017 list was 1 April 2015. Since then there have been substantial increases in rental and construction costs impacting the liabilities on the 2023 Rating List.

Average rateable value for quarries has increased by 25%

Gerald Eve’s clients are no exception. For example, the team was instructed to check the rates for a quarry where the rateable value has increased from £140,000 to £340,000. Such large increases in liability may not be initially reflected in the rates bill because of transitional phasing. However, transitional phasing relief for quarries can be complicated because of extraction rate changes; if not calculated correctly operators may miss out on transitional phasing and be hit with a significant step-up in rates liabilities.

The revaluation date for the 2023 list also calls into question the accuracy of assessments. Based on the rateable value of properties on 1 April 2021, the assessments of the 2023 rating list will reflect the impact of the pandemic on the sector. However, not considered in this assessment will be the effects of continuing falls in UK economic growth and the associated weaker construction forecasts for 2023.

As part of statutory requests for information, mineral operators will have sent tenure information to the Valuation Office. The Mineral Valuer will have noticed an increase in royalties, particularly for those based on selling price, and will look to reflect this uplift in royalties in rating assessments. This, complemented with increases in costs of rateable building, plant and machinery, will result in an increase in rateable values and associated liabilities for most quarry operators. This will be despite operators extracting similar amounts or even less than in recent years.

Current estimated 2023 Rating List entries are mostly based on 2021’s extracted tonnages providing out-of-date draft figures. If operations have ramped up over the last year and are expected to maintain at this level, rates bills for 2023 are likely to be even higher than the current draft list figures, albeit your bills may not be adjusted for more than 12 months. This could lead to a nasty shock for those who have budgeted based on potentially inaccurate draft assessments.

Prepare now to budget correctly for operational expenses over the next 12 months

For properties in England and Wales, you can review your business rates through the ‘Check Challenge Appeal’ process from 1 April 2023 or try to pre-agree them before then. For properties in Scotland, ratepayers only have until 31 July 2023 to submit a challenge for their 2023 rateable values. For more information about reviewing your business rates, contact Simon Atherton and the team at: mineralsrating@geraldeve.com.

• Gerald Eve, chartered surveyors and property consultants, advise 40% of FTSE100 companies on all aspects of property, including planning, asset management, agency and professional. The firm has 550 employees, working from nine offices across the UK. 

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