Liverpool facing business rates “crisis” thanks to appeals backlog

A “business rates crisis” is brewing in Liverpool apparently caused by the huge and expensive backlog in business rates appeals.

Appeals are currently ongoing against bills worth around £9.2m. Latest statistics from the Valuation Office Agency (VOA) show that it is facing a backlog of almost 284,000 business rates appeals nationally.

Even if only a fraction of those are successful – and the success rate is pretty high, believe me – then we are still talking about hundreds of millions of pounds that have been billed and are now effectively in limbo. Councils are uncertain of whether this money will have to be re-paid – and possibly backdated – which would leave huge holes in their already depleted budgets. If Liverpool is facing this crisis then the 320+ other local authorities in England and Wales will be in a very similar situation.

I’m pretty sure that a lot of these appeals have come as a result of the postponement of the Revaluation from 2015 to 2017, which would normally allow business rates to be recalculated to the current markets and not artificially set against pre-recession figures taken in 2008.

Appeals also peaked in 2014 thanks to new rules and deadlines being imposed in Chancellor’s Autumn Statement. Between January and March 2015, 201,000 appeals were submitted to the VOA. A rule change removed businesses’ ability to backdate any savings between 2010 and 2015, meaning they would lose out on five years’ worth of overpaid rates and only be repaid for rates overcharged between 2015 and 2017.

The VOA has hefty appeal targets to meet but this, coupled with Government rule changes and delivering the 2017 revaluation, has created a “perfect storm” scenario for the Agency to deal with and a very imperfect situation for businesses and Local Authorities.