Backlog of business rate appeals costing firms dearly

Around £1.8bn is being held up in business rate appeals according to industry estimates with 240,000 appeals outstanding against the 2010 List.

And whilst the inflexibility of the current Rating system plays into the hands of Government which enjoys around £24bn from the tax annually, the revaluation cycle sees the Rateable Value reassessed against the current rental market for all commercial property every five years. So, unlike other substantial 'fixed' costs such as rent where everything is negotiable, business rates are hugely inflexible and only go one way – up.

Retailers in particular have been hit hard with a 5.6% uplift in the multiplier in 2012 and another 2.6% rise in the rates bill due next month. Even if businesses lodge an Appeal it can take months for a decision and the funds to filter back.

At the last formal count in 2012 there were over 240,000 business rates appeals outstanding on the 2010 Rating List, an actual fall of 2% when compared to the 2005 Rating List in the first two years. Despite the drop, there have been 41% less appeals settled.

There are several factors that could be at play. The system is hugely bureaucratic and as the Government scales back the Civil Service as part of its Austerity plan, it is unlikely that the Valuation Office has been spared in the budget cuts. Less officers to work on the Appeals and the back log understandably grows.

The system undoubtedly needs looking at. Many businesses will be desperate for their appeal to come through and rightly receive a rebate – sometimes backdated for many years.

As the retail sector in particular continues to retract, this will provide even more opportunity for Appeals, for example, under a Material Changes of Circumstance (MCC). But this will further back up the system, tying up more cash and starving businesses of finance. It is a vicious circle.

Business rates is an issue that affects any and every business in the UK that needs premises to houses its staff, products or processes and there are many opportunities to manage and reduce these business rates. If you wish to speak to Stuart Hicks, without obligation, on how Dunlop Heywood can help you mitigate your rates liability then email stuart.hicks@dunlopheywood.com.