Trade bodies blast 'unjust' business rates proposals

Trade bodies blast 'unjust' business rates proposals

A coalition of trade bodies is urging the government to abandon “unjust” changes to the business rates appeals system that could leave businesses over-paying tax.

Bosses of the business groups, which include the British Retail Consortium, CBI, British Property Federation and the Federation of Small Businesses, are arguing against new proposals that will see the removal of powers from the body that administers business rates, the Valuation Tribunal for England (VTE).

The proposals suggest that the VTE will only be able to order a change to business rates liabilities when it considers that they are inaccurate outside “the bounds of reasonable professional judgement”, which the coalition says is a "nebulous concept which could be difficult to determine".

At the moment, the VTE can make changes "when it sees fit", according to City AM.

In a joint letter to communities secretary Sajid Javid, the organisations warn that, if brought forward, the proposals will cause individual businesses to "sink into hardship", and undermine businesses’ confidence that their rates valuations are correct.

The letter also argues that the proposals could potentially lead to a host of legal challenges and prevent an independent organisation (the VTE) from correcting excessive tax assessments.

The letter notes that in 2000 the government consulted on a similar proposal, but deemed it unfair to ratepayers and concluded that it should not be adopted.

Ion Fletcher, director of policy (finance) at the British Property Federation, said: “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.”

James Lowman, chief executive of the Association of Convenience Stores, added: “Business rates are already one of the biggest fixed costs for many convenience store retailers, especially those operating on petrol forecourts. We do not believe that the appeals proposals are fair, and are concerned that retailers who are successful in their appeals could still end up paying up to 10% more than they should do.”

Earlier this year, former chancellor George Osborne, announced a raft of changes to business rates.

Osborne said that around 600,000 properties would benefit from paying no business rates at all in 2017-18 after he increased the rateable value threshold from £6,000 to £12,000. Meanwhile, properties of a rateable value of between £12,000 and £15,000 will benefit from “tapered” relief, Osborne said.

At the time, the Booksellers Association (BA) welcomed the measures, which is estimated would provide rate relief for around 40% of independent bookshops.

Tim Godfray, c.e.o. of the BA, said at the time: “The BA has been lobbying government on the necessity for business rates reform for many years and we have stepped up this activity considerably in the last year, as this is a pressing issue for our members. When we surveyed our members in February 2016, we found that 88% did not believe that the business rates’ system was fit for purpose."