BUSINESS RATES RISE ‘ILLEGAL’
13 major bodies unite to issue warning...
Ministers were facing a growing revolt over the business rates shake-up last night as leading bodies claimed it could be illegal.
Thirteen business groups signed a letter warning small firms could be blocked from appealing against big rises in their rates.
More than 500,000 cafes, shops, hotels, nurseries, schools and hospitals will pay up to 300 per cent more from April, following the first revaluation of business rates for seven years.
But under the reforms, they could be prevented from appealing against the bills if they are within a ‘ margin of error’ which experts have claimed may be as high as 15 per cent.
The business groups, including the British Retail Consortium, the Confederation of British Industry and the Federation of Small Businesses, say this could be illegal under local government finance laws.
Experts said the Government’s message was, ‘Pay up, don’t appeal, and shut up’.
Figures show it is still tackling 280,000 appeals against rate hikes from the last change in 2010 – a total likely to soar in the coming weeks.
Yesterday questions were being asked about Communities Secretary Sajid Javid’s leadership amid the crisis as officials said he had stayed on holiday, despite the uproar. As the backlash intensified, it was revealed that: ÷More than £100million of UK foreign aid has been spent on malls and retail chains around the world despite shops facing tax hikes here; ÷Three in four small firms said the prospect of business rate rises was now their major worry; ÷Even the Queen will be hit – with a potential
£ 0,000 increase in bills for Buckingham Palace; ÷Mr Javid said thousands of businesses in the North and Midlands would benefit from falls in rates.
The revaluation sparked uproar after it emerged online giants such as Amazon would benefit while small stores would lose out.
But yesterday it emerged many firms will face a double hit because of changes to the appeals regime. Currently, all appeals must be con- sidered. But rules due to be passed before April would mean only businesses that claim their rate is wildly inaccurate would have it rectified.
If the disputed amount is within a ‘margin of error’ the appeal could be rejected. Experts understand this will be around 15 per cent but the Government denies there is a specific limit and insists officials will use their professional judgment.
The move was seen as a bid to reduce the seven-year backlog of appeals, which is expected to balloon from April when businesses can appeal against the new rates. The business groups called on Mr Javid to withdraw the loophole.
James Lowman, of the Association of Convenience Stores, said the plans ‘will leave retailers powerless to challenge their bills unless they are wildly inaccurate’.
The Government’s Valuation Office Agency will be able to block appeals on the basis of ‘reasonable professional judgment’. Officials say allowance must be made for the fact official valuers and private valuers hired by firms sometimes disagree slightly over rates. But business groups say appeals cannot be blocked under the Local Government Finance Act 1988.
The law says the Government can make regulations on appeals, but does not say it has the right to ban appeals on the basis of accuracy, or to define what accuracy is.
Debbie Warwick of property specialists Daniel Watney LLP, which co-signed the letter, said: ‘This change is not just morally but legally wrong. It’s the equivalent of making it illegal to challenge an incorrect income tax bill.’ The appeals process is due to become more complicated from April, with three stages instead of two.
Jerry Schurder, of rates specialists Gerald Eve, said firms were facing ‘an obstacle course’.
The new powers would allow the VOA to refuse to adjust a rate when a valuation tribunal has judged it inaccurate – unless it is deemed ‘outside the bounds of reasonable professional judgment’.
The British Retail Consortium’s Helen Dickinson said: ‘This would
be unfair to ratepayers and create additional uncertainty for local government.’
John Webber of rates specialists Colliers International said the Government was ‘short-changing’ businesses and the reforms will make appeals ‘harder, more expensive, more time consuming and will still provide no justice’.
‘The Government’s message is clear – pay up, don’t appeal, and shut up,’ he added.
Retail expert Mary Portas claimed ‘at least a third’ of inde- pendent shops would be forced to close. Writing in the Daily Telegraph, she said it will be ‘the single biggest blow to independent shops since the financial crisis’.
Tory Party vice-chairman Mark Field said retailers would ‘simply shut up shop’ unless the impact on small businesses was limited. His City of London and Westminster constituency is one of 20 Toryheld areas facing a rates rise.
‘The depth of feeling over this, especially in Tory heartlands, means I am confident that some equitable changes will be made,’ he told the Daily Telegraph.
Mark Rigby of CVS Business Rent & Rates Specialists said the Government ‘continues to ignore the cries’ of overstretched VOA staff.
A Government spokesman said claims the clause was illegal were false, adding: ‘We are not preventing anyone from appealing … or setting any margin of error … We’re reforming the appeals process to make it easier for businesses to check, challenge and appeal.’