The industry has criticised the government for failing to take any meaningful steps towards business rates reform, after it published an interim report into its review as part of its “Tax Day” today.
The interim report described how respondents to its consultation called for reform of the relief system, including empty rates relief, an overhaul of the appeals system and for considerations to alternative taxes such as an online sales tax, along with outlining several other concerns.
However, the government stopped short of indicating whether further action on rates will be taken until the autumn, when it is expected to publish the final report into its review.
John Webber, head of business rates at Colliers International, labelled the latest report as “Groundhog Day”.
“Everything that has been said today has already been said on all previous consultations,” said Webber.
“We are not sure why the government needed a special ‘Tax Day’ to let us know this. We are desperately disappointed that there is no indication of further action on business rates until the autumn, which seems like kicking the can down the road yet again.
“No action at this stage in the economy is harmful given the number of companies facing financial ruin. The government had a real chance to grab the bull by the horns today. Instead, it looks like it hasn’t even started the walk to the field.”
Robert Hayton, UK president at Altus Group, said: “I am extremely disappointed for the tens of thousands of office occupiers whose employees have been under a work-from-home message for a year now.
“They have had to pay full business rates bills while appealing their taxes citing a material change in circumstances. Today was a golden opportunity for the government to have rubber-stamped an interim offer from December that would have resulted in a half-a-billion-pound rebate.”
Hayton also pointed to the possibility that the government could pivot away from its pledge to reduce the overall burden of business rates in the long term.
He highlighted the first page of the interim report, in which the government stated that it faces a “greatly changed economic and fiscal context from the one in which this review was launched”.
Hayton said: “With government borrowing at almost £280bn during the current financial year and public sector debt at £2.1tn, it remains to be seen whether the government will now be able to deliver upon their election manifesto pledge to cut the overall burden of business rates in the long term.
“There now seems to be a distinct shift away from that pledge in favour of a commitment of simply improving the tax system.”
The report was published among a host of “Tax Day” policy consultation documents and proposals.
These include a consultation on a new tax on the largest residential property developers, which the government plans to introduce in 2022 to help pay for the costs of cladding remediation. This is set to be published in the coming months.
Other property-related proposals also included valuing holiday lets for business rates.
Despite industry speculation, there was no significant update on capital gains tax or stamp duty land tax.
Justine Delroy, head of tax and structuring at Addleshaw Goddard, said: “The announcements are generally much less eventful than we’d have expected. There was no mention of widely-anticipated changes to capital gains tax, which either could perhaps be an attempt to avoid the rush of disposals by business owners wishing to crystallise gains under the current regime.
“Overall, the reforms still leave taxpayers facing a high degree of uncertainty.”
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