Not since the BPF’s Bombsite Britain campaign eight years ago has the rather techy and turgid subject of business rates generated the headlines we saw splashed across tabloids last week.
But without a coordinated, firm and united response from our trade bodies, ministers will get away with peddling deceptions and half-truths.
After laying low for months, the government finally responded to justify its position using misleading language and sleight of hand to deliberately ignore key points put to it by countless business bodies and experts. We have to call this out.
Assertions that claims made within the letter we drafted up with BLP are false are pure procedural obfuscation by ministers.
The sole basis upon which the government is suggesting that the claims are false is because businesses would still be allowed to take an appeal to tribunal – and bear the cost of doing so. In fact, a new fee for lodging an appeal against an assessment is also being introduced by the government. But the fact is that any appeal within the “reasonable professional” margin of error would be rejected by default.
One of the government’s other claims last week was that it is “reforming the appeals process to make it easier for businesses to check, challenge and appeal their bills… trying to discourage speculative appeals where people are trying to chance their arm to get a reduction.”
This fails to engage with the key point of the letter that the Local Government Finance Act 1988 cited in the proposed reforms does not give the government the right to set a margin of error for whether appeals are successful where a valuation is found to be incorrect. The regulations are therefore still outside the law.
This is why we have urged the government to withdraw the relevant clause on “reasonable professional judgement” from the proposed regulations.
Most honest surveyors would agree with ministers that ambulance-chasing PPI-style claims need to be stopped. But fundamentally, it is unjust for the government to decide whether or not appeals should go through on the basis that firms with incorrect valuations may be “chancing their arm”.
The entire point of a justice system is that it does not prejudge a case, or judge a case on its motives rather than the facts at hand. Every taxpayer should have the right to query the basis of their tax bill and be entitled to transparency on how the bill is determined from the outset. But under the government’s proposed changes, taxpayers will not be given the evidence behind an assessment until they have paid a fee for their appeal. If the government wants to reduce the number of appeals, there should be more transparency, not less.
Transitional relief
One of the other government claims was that “a transitional relief scheme is in place to support ratepayers by capping and phasing in any rise in bills”.
What the government fails to mention is that it has changed the transitional relief arrangements. Previously firms seeing the biggest rates rises had the increase in their bills in the first year capped at 12.5%. That cap has been raised to 42% with little warning and for no apparent reason.
Adding nearly half again to a firm’s rates bills hardly constitutes a transitional arrangement, and is a tremendous shock to businesses at a time when the British economy is being carried through uncertainty by strong retail spending.
There was speculation last weekend that the chancellor may now seek to address some of this in the Spring Statement. What’s clear is that the current support package is inequitable and poorly phased.
Unclear cuts
The final claim, that “three quarters of businesses are going to see their rates fall or stay the same…” also ignores the critical point that due to a painfully slow runway for reductions, around half of 5,000 retail premises we examined (that are set for reduced bills) will still not have their full rate cut in three years’ time due to the transitional arrangements. Worse, by the time they see the rates cut, firms may well have seen it wiped out by the fall in sterling or overtaken by inflation.
Nearly a fifth of the premises examined will still not have their full rate cut in five years’ time.
This is unjust. Those in larger properties due cuts to their rates now face a scenario where their bill decrease is capped at 4% max in the first year, and at less than 25% over five years. This is a travesty, especially in areas where ratepayers have been overpaying since 2010 due to falls in property values. The principle of the revaluation is sound, but the unfair redistribution of the burden is not.
Clearly, the government is between a rock and a hard place. It needs to maintain consumer spending and keep retailers afloat but also keep the £28bn annual harvest it reaps from rates. Unlike 2008, firms cannot simply knock down buildings to avoid these unfair bills. We need to come together and find a legal solution.
Debbie Warwick, partner, head of rating, Daniel Watney
