The new business rates appeals system has come under fire after government data showed that the number of property owners contesting the tax has dropped.
There were on average 940 challenges to business rates per month between 1 April – when the new “check, challenge and appeal” process was put in place – and the end of September, versus an average of 17,500 per month in 2010, figures published by the Valuation Office Agency (VOA) have shown.
Of the 5,650 challenges made between April and the end of September 2017, 2,260 were unresolved and only 400 progressed to a formal stage. The figures cover properties in England only.
A VOA spokesman said: “The previous appeals system was broken and encouraged speculative appeals – around 70% did not result in any change in valuation.
“These statistics cover the first six months of a brand new system. It’s still early days and we continue to improve the functionality of the service.”
John Webber, head of business rating at property company Colliers International, said the new system was to difficult to use: “It beggars belief that businesses are so happy with their rate bills in 2017 that hardly any one is contesting. We would argue the figures for 2017 are so low purely because ratepayers can’t navigate through the new system.”
The number of challenges was found to be lower than in Scotland and Wales, where the check, challenge and appeal process has not been introduced.
Last week it emerged that 29% of Scottish businesses appealed the 2017 Rating List assessments, representing a value of £5bn, while in Wales, 2% of rating assessments in the 2017 list are being appealed.
Colliers said the English figures should “by rights dwarf the other two countries”, since there are 1.85 million rateable properties in England compared with 245,000 in Scotland and 118,000 in Wales.
Alex Probyn, president of UK business rates at real estate advisory provider Altus Group, said: “The new regulations are here to stay and need more time to be made to work. While there remain genuine concerns in the ratings community, we believe the new regulations can be made to work through co-operation and anticipate the numbers rising dramatically in the new year as advisers assemble the evidence required.”
The news comes as it was found that English councils have made provisions for a 3.2% average of business rates to be returned to ratepayers following successful appeals.
This totals £4.5bn over the five years from 2017 to 2022, according to Altus, which made a Freedom of Information request to the Office for Budget Responsibility.
Altus said it is undertaking due diligence on more than 63,000 properties that could be subject to appeal against the 2017 valuation.