Appeals could derail business rates devolution if we’re not careful
The appeals system in its current form could derail the whole business rates devolution process, if we’re not careful.
According to the Communities and Local Government Committee in an interim report on the proposals just released, the appeals system was often the first issue raised in written submissions and oral evidence. Local councils are now being warned that under plans to devolve full control of business rates by 2020 they will be responsible for 100% of refunds in business rates, rather than the current 50% exposure.
The issue of appeals has to be resolved before the government can push through with business rates changes and, if unchanged, could derail the whole business rates devolution process.
The report also highlights another important fact that councils would have to set aside monies to cover successful rating appeals, tying up large sums of cash for long periods of time.
One good example is that a recent appeal in respect of Event City in Manchester took several years to resolve. Another example relates to Virgin Media whose appeals potentially affect 60 local authorities. In Stockton-on-Tees, the borough council has set aside £2.8m in case the appeal is successful. Multiply that by 60 and you get a sense of the potential effects. Councils are already said to have spent £1.75bn on covering backdated appeals in the past three years alone.
At the moment in Greater Manchester, where business rates retention has been trialed, funds for appeals are being dealt with separately, so perhaps this is an approach that could work on a national scale?
The report said the government should also consider other proposals for dealing with the problem, including adjustments to top ups and tariffs, or using central rating list revenues to fund repayments to businesses resulting from successful appeals prior to 2013 – again the need for more frequent revaluations is put forward where in Northern Ireland a three-year revaluation cycle is being discussed. Lots of options on the table but actually as we are already half way through 2016, there’s not that much time if the Government wants to ‘grasp the nettle’, instead of paying lip service to this issue…
A Government spokesman has said they will consider the proposals “carefully” – phew, what a relief, here’s me thinking they were going to glance at them over a pint in their local Whitehall watering hole.
A Tory MP is calling for business rates to be scrapped and replaced by an increase in VAT in order to save high street businesses.
Maximising income and protecting cash flow has never been more important for landlords as the UK battles through the latest stage of the pandemic.
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