Business rate proposals could kill off SME appeals
If the current Government wants to be seen as the champion of small and entrepreneurial businesses, they sure have a funny way of showing it sometimes.
Business leaders are currently queuing up to criticise their sledge hammer approach to cracking the nut of Business Rates appeals. The creaky system we have at the moment is far from perfect but recent proposals aired in the Government consultation documents make uneasy reading.
As a result, critics have been quick to accuse the Government of ‘complexity’ and ‘punitive measures’ in a fairly transparent attempt to force down the number of future appeals with the VOA still having a backlog of current appeals running into the hundreds of thousands as a direct result of current Government policy.
But business lobbyists warn that details from the recent consultation paper, are “draconian” and “unfair” making it as difficult as possible for small firms to make a fair appeal against their rateable value.
As always, the devil is in the detail issued by the Department for Communities and Local Government (DCLG) but with fines being mooted for those who file an ‘incorrect’ appeal it could form a real barrier to justice. Small businesses may well decide it’s simply not worth the risk to challenge their assessment even if there seems a clear-cut case to do so.
The proposals for the new business rates appeals system involve a three-stage process: check, challenge, and appeal. Each stage has its own requirements and deadlines but a failure to meet these criteria could cause the appeal to fail.
For the “check” stage, the ratepayer must judge whether the information the VOA has on file about their property is correct. The VOA has reserved the right to take up to 12 months – more if agreed with the ratepayer – to disclose this information.
The ratepayer then has four months to submit a “valid” and “complete” challenge. Fines can be levied if incorrect information is supplied.
These stages will undoubtedly add extra layers of bureaucracy to the process and, whilst it could certainly deter many businesses from making a challenge, it is hardly going to speed up the overall process.
At present, if you think you are paying too much in business rates you can challenge it directly or get an appropriate Chartered Surveyor to do it for you. If these proposals are adopted you may have to wait up to 12 months to get information from the VOA in the first place, then produce binding evidence, possible precedent and case law to back your claim – get it wrong and you face a fine. So, for some it is not just having the system stacked against you, but pretty much looking at the North Face of the Eiger for many SMEs.
I’m pretty sure the fines are to put people off from making spurious claims, usually rogue business rates companies who will file an appeal based on an upfront fee based on promises but with very little hope of success. However, the fines will still hit the ratepayer not those who file on their behalf – adding insult to injury.
Currently around 70% of business rate appeals fail and this is a key figure that the Government wants to reduce one way or another. The proposals form part of the new Enterprise Bill currently winding its way through Parliament and the consultation on these proposals closes on 4 January.
This week saw business rates rise again, with the multiplier increasing to 50.4p in the pound – a hit many companies could do without.
It is looking like the Scottish Government is to follow in English footsteps by making business rate revaluations more frequent.
The appeals centered on two business rates avoidance schemes where the properties were vacant and liable for unoccupied rates.