Councils counting the heavy cost after recent business rates ruling

A recent business rates ruling with significant financial implications for local authorities has come to light from the leafy lanes of Worcestershire.

Local councils across the county are being affected by an Upper Tribunal ruling on the way business rates are calculated on purpose-built GP surgeries. In this one county alone, experts are predicting millions will have to be paid in refunds, not to mention the loss of future tax revenue for LAs.

The Valuation Tribunal ruled that purpose-built GP surgeries across the country should qualify for a much lower Rateable Value, leading to huge savings on their annual business rate bills. The decision completely changes the approach to the valuation in respect of surgeries occupied by the NHS – moving from a rental approach to one based in respect of the building costs.

Worcestershire County Council, Worcester City Council, Wychavon District Council, Malvern Hills District Council and Hereford & Worcester Fire Authority have since written to the Government calling for an urgent review.

They are estimating surgeries in Wychavon alone will receive a £3.5m refund and £600,000 a year on an on-going basis from this financial year, while surgeries in Malvern Hills will receive a £3m refund and £400,000 a year. It’s understood that refunds will be retained by NHS England and the future money by local Clinical Commissioning Groups.

The case also has much wider consequences with around 1,600 appealed cases across the country still outstanding.

For the Business Rates boffins among us who want more details, the case that was decided in the Upper Tribunal was in respect of Gallagher (VO) V Dr M G Read & Partners and Dr J Poyser and partners.

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