Industry bodies are up in arms over a proposed change to the business rates regime, which will see certain appeals blocked even if the valuation was wrong.
The government has been consulting on plans to introduce a new three-stage “check, challenge, appeal” approach to business rates, which it hopes will reduce the number of appeals going through the system.
However, under a “reasonable professional judgment” provision, retailers would not be able to argue against a rates bill if its margin of error was inside 15%.
This week, property consultancy Daniel Watney and Blackstock Consulting published new research suggesting small firms in England could overpay by up to £137m a year as a result. Over a five-year ratings cycle, it would work out at more than £689m.
It prompted an outpouring of objections from the British Property Federation (BPF), retail body Revo and the British Retail Consortium.
Debbie Warwick, head of rating from Daniel Watney, said: “For most businesses, rates are the third largest expenditure and for any ratepayer an overpayment of 15% will impact profitability. Saying a business cannot appeal an incorrect bill is unjust.”
Ion Fletcher, director of policy at the BPF, agreed: “It is hard to see how these proposals improve our broken business rates appeals system. They will undermine ratepayer confidence and compound the already high burden of business rates. Not only do businesses and jobs suffer as a result, but the more money that is spent on business rates, the less that is available for property owners to invest in improving our towns and cities.”
Jerry Schurder, head of business rates at property consultancy Gerald Eve, added: “These wildly unfair proposals represent the government’s intention to grant itself the equivalent of papal infallibility and legislate away its errors, making hard-pressed businesses pay for the Valuation Office Agency’s (VOA) mistakes. The government seemingly has no confidence in the VOA’s assessments, in which case it needs to reform the VOA or the system, not penalise businesses by outlawing appeals.”
Edward Cooke, chief executive at Revo, formerly known as the BCSC, said: “The only thing worse than hitting retail businesses senselessly with increasing business rates bills is prohibiting companies from challenging their tax bill when they know they are paying too much.
“Consumer spending is holding up our economy right now, but if the chancellor doesn’t change tack on business rates he risks killing the golden goose just weeks before Christmas.”
The government said too many business rates appeals remain held up for too long, “creating costs and uncertainty for businesses and for local authorities”.
It added: ”The reforms aim to provide a system which is easier to navigate, particularly for small businesses or unrepresented ratepayers, with the emphasis on early engagement by the parties to reach a swift resolution of cases.
“Under the reformed system, businesses will be more confident that their valuations are correct and that they are paying the right amount of business rates and any refunds due will be paid more quickly.”