Quarries urged to plan ahead for 2010 rating revaluation

WITH property occupancy costs rising against a background of marketuncertainty, business rates specialists Gerald Eve are advisingratepayers in the minerals sector to start planning now for next year’srating revaluation.

The Valuation Office Agency and Scottish Assessors are alreadypreparing their valuations of all properties for the 2010 revaluation.These will be based on rental and royalty values, capital costs ofplant and machinery and economic circumstances as at 1 April 2008.

Quarries are valued for rates by applying a royalty rate per tonneto the number of tonnes extracted per year, to which rateable plant andmachinery is then added.

‘There is some evidence of increases in royalty rates agreed for newleases and in review negotiations that could lead to higher ratingassessments in 2010, albeit the evidence is limited and royalties areaffected by numerous variables,’ said Philip King, minerals partner atGerald Eve.

‘Rateable plant and machinery at quarries is valued by reference toits capital cost, which has increased substantially. Assessments for2010 will also reflect changes in the statutory decapitalization rateby which costs are converted to annual value.’

For the 2010 assessments, the Government has decided not to reducethe decap rates in England, which remain at 5% for quarry plant andmachinery – a move which Mr King describes as ‘hugely disappointing’considering the significant cuts in interest rates.

‘2010 might be some way down the worry list of many companies whooccupy quarries and associated properties as far as their rates billsare concerned,’ said Mr King. ‘However, early recognition of the issuesaffecting the next rating revaluation will help businesses to planahead, both in terms of the action they can take to minimize theirrates bills and in the provision of more accurate budget forecasts.’

To mitigate rates liability, Mr King advises quarry operators toconsider whether there may be grounds for temporary or permanentallowances on the back of working difficulties at the quarry, as wellas overcapacity issues at a time when the market is tough.