Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her department has made of the potential impact of the Valuation Office Agency's reclassification of flexible office spaces as single properties on (a) the level of business rates and (b) small and medium-sized enterprises.

The Valuation Office Agency (VOA) is responsible for valuing non-domestic property for business rates purposes. They are required to maintain accurate rating lists in England impartially and independently of central Government, and must consider developments in relevant caselaw.

As a result of case law developments, the VOA have concluded that, rather than each room within a serviced office being assessed separately, most serviced offices will need to be assessed as a single property, unless clear evidence demonstrates a need to have separate assessments. Each serviced office is looked at on a case-by-case basis, and the VOA are addressing properties where they have received legal advice, or where unit of assessment issues are brought to its attention. Reviewing a small number of cases will help clarify the application of legislation on serviced offices. At this time, there is no sector-wide review of serviced office assessments underway. The VOA will continue to monitor legal developments and update its approach as needed.

A single rating assessment would mean occupying businesses will face no business rates bill at all. Instead, the serviced office provider will be liable for business rates on the entire assessment. It is for serviced office providers to decide if they will pass the cost on to their tenants, depending on contractual agreements.