Reforming the business rates appeal process

Accounting & Tax Channel All Members, Non Members

The news recently has been full of unfortunate cases illustrating the consequenses of the up and coming business rates review in April this year.

Simon Jack, business editor at the BBC says:

“Although many businesses are expecting small falls in business rates in April, around a third are expecting very sharp rises, with a fifth – mainly in the South East – expecting a rise of more than 40% immediately – and that is AFTER a government plan to use £3.6 billion pounds saved by the winners to offset the pain of the losers. The Federation of Small Business is warning than half of those facing hikes will reduce, postpone or cancel investment, with nearly a fifth considering closing down or selling up. Revaluations happen every five years, but the 2015 reset was postponed ahead of the last general election – hence the severity of the moves. Many of the newest and biggest retailers like Amazon and ASOS are expected to benefit from reductions in rates on their out-of-town sites. The government has signalled it may find extra money to help the hardest hit.”

The Department for Communities and Local Government (DCLG) has set out its plans to reform the business rates appeal process. Under the plans, the Valuation Tribunal for England will only be able to change a valuation if the existing valuation is “outside the bounds of reasonable professional judgement”. Therefore, ratepayers will not be able to successfully appeal if an incorrect valuation is within a reasonable margin of error.

However, a number of business rates experts and membership organisations have warned that the proposals could be illegal. This is because DCLG does not define “reasonable professional judgement”, meaning the decision to change a valuation is highly subjective and making it intentionally difficult for ratepayers to successfully appeal against an incorrect valuation.

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