Finance Minister Faces Pressure Over Revaluation Decision
The debate over business rates reform in Northern Ireland has intensified after Finance Minister John O’Dowd paused the Reval 26 revaluation process.
The decision was initially seen as relief for the hospitality sector, particularly pubs and hotels that were facing sharp increases in their rates bills. However, the move has now sparked legal action from other businesses that believe the pause has unfairly affected them.
Why the Reval 26 Process Was Paused
The Reval 26 business rates review is part of a routine revaluation that takes place every three years. The goal is not to raise extra revenue but to ensure that each business pays its fair share based on current property values.
Under the draft proposals:
- Hotel valuations were set to rise by 84%
- Pub valuations were projected to increase by 47%
- Industrial and warehousing properties would see around a 16% increase
According to Land and Property Services, these increases reflected improved trading conditions after the Covid-19 pandemic, as well as property upgrades and market demand.
However, the proposed changes triggered strong opposition from hospitality businesses, who warned that the increases could damage the sector and lead to higher consumer prices.
In response, the minister announced a temporary pause, stating that the system must remain “fair and equitable for all businesses.”
Cinemas Claim Financial Loss and Launch Legal Action
The pause has not been welcomed by everyone. Omniplex, the region’s largest cinema operator, has begun legal proceedings against the Department of Finance.
Paul Anderson, head of Omniplex, said that 13 out of 15 cinemas under the company would have benefited from reduced rates under Reval 26. He estimates that the business could have saved nearly £500,000 annually.
Anderson argued that while pubs and hotels represent about 2% of ratepayers, their concerns have dominated the discussion. He believes the pause unfairly disadvantages the remaining 98% of businesses.
Omniplex’s legal team has issued a pre-action letter, seeking to compel the minister to proceed with the revaluation.
The Department of Finance confirmed it had received legal correspondence but declined to comment further.
How the Business Rates System Works
Business rates are calculated based on a property’s Net Annual Value (NAV). NAV estimates the annual rental value of a property at a specific point in time.
The NAV is then multiplied by the “rate in the pound”, which determines the final annual rates bill.
Revaluations aim to update these figures to reflect current market conditions. While some businesses see increases, others benefit from reductions. The system is designed to remain revenue neutral, meaning the government does not collect extra money overall.
Concerns Over Fairness and Precedent
Before the pause was announced, Sharon Gallagher, head of Land and Property Services, told Stormont’s finance committee that delaying the implementation could be unfair to other sectors.
Minister O’Dowd later acknowledged that any revaluation creates both “winners and losers” but emphasized the importance of calming tensions and encouraging constructive engagement.
Meanwhile, hospitality representatives, including Hospitality Ulster, maintain that the draft valuations would have severely damaged their industry.
Chief Executive Colin Neil stated that members had lost confidence in the valuation process and warned that the increases could have been financially devastating for pubs and hotels.
What Happens Next?
Omniplex’s legal challenge is now progressing. Although no court date has been confirmed, the company hopes for a swift resolution before new business rates bills are issued in early April.
The outcome could have significant implications for business rates policy in Northern Ireland, potentially influencing how future revaluations are handled.
As tensions continue between sectors, the debate highlights the difficult balance between supporting vulnerable industries and maintaining a fair, transparent tax system for all businesses.
