The Treasury’s “unjust” business rates appeal block could cost SMEs more than £700m in the next five years, new research has found.
Under the ‘reasonable professional judgment’ provision in draft regulations for the new business rates appeal regime, ratepayers won’t be able to argue against a rates bill if its margin of error was inside 15%.
>>>From August: New rules to ‘outlaw’ business rates appeals
Research by Daniel Watney and Blackstock Consulting, using official Valuation Office Agency data, has estimated this could cost small firms in England more than £700m over the next five-year rating period.
Qualifying small businesses whose properties had a rateable value of between £12,000 and £15,000 could overpay by up to £137m a year if this new rule is applied, the research found. Over the full five-year ratings cycle, this would work out at more than £689m. The full figure would also include business above the £15,000 threshold too – increasing the potential cost significantly.
Of those overpaying the £689m, there are many whose assessments would fall below £12,000 rateable value and be totally exempt from rates if their assessment was reduced by up to 15%. However, under the proposed ‘reasonable professional judgement’ clause they could be denied these reductions. Those that could qualify for total relief will instead pay out £431m of the £689m total over five years.
The proposal is included within draft regulations for the new “Check, Challenge, Appeal” business rates appeal regime, which has been widely condemned by a consortium of eight business lobby groups, including the British Property Federation, British Hospitality Association, British Retail Consortium, Revo, Gerald Eve and the Federation of Small Businesses.
Martin McTague, policy director at the FSB, said: “We welcomed the government’s ambition to make the business rates appeals system fairer and easier to navigate.
“However, it is hard to see how this proposal helps to achieve that aim. We believe this clause simply fails the fairness test and could result in the door being shut on small businesses who want to correct inaccuracies in valuations and reduce their rates bills.”
The Treasury has yet to respond to requests for comment.
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