U-turn on business rates is set to save firms £2.5BILLION
All the news and analysis for ambitious company owners
COMMUNITIES Minister Sajid Javid is set to announce a major Government U-turn this week when he scraps controversial plans to ban companies from appealing against rises in business rates.
The reversal – expected to save businesses £2.5billion over the next five years – will heap pressure on the appeals system, which is already groaning under a backlog of 250,000 outstanding cases.
The Government has come under a sustained attack over its proposal to forbid businesses from appealing against their rates bills even if they were clearly wrong. The plans have been branded ‘illegal’ by some critics.
The Government had proposed automatically rejecting appeals as long as the bill was within a margin of error expected to be as much as 15 per cent on the grounds that this was within the range of ‘professional judgment’.
However, under joint proposals being prepared by Javid’s depart- ment alongside the Treasury after a furious backlash from businesses, the plan will now be axed.
Under the Government’s £25billion business rates system, firms in areas where property costs have soared have been facing huge increases.
Plans for the overhaul of the appeals process were first revealed in The Mail on Sunday in November. The Government is considering ways to introduce limits on the number of appeals in order to ease the backlog of cases – some of which date back to 2010.
It had already increased the amount set aside to settle appeals by 10 per cent, prompting claims the Government would pocket the extra if appeals were blocked.
Following conversations with Government this week, Mark Rigby at ratings adviser CVS said he had been given ‘the strongest possible indication’ that the Minister had ‘taken on board the concerns of business’.
CVS has estimated that the U-turn could save businesses £2.5 billion over the next five years, based on the conservative assumption that the margin of error would be set at 10 per cent rather than the widely expected 15 per cent.
Rigby said: ‘I believe the Secretary of State is fully committed to ensuring all firms pay fair and accurate tax without rebates being curtailed.’
CVS said the proposed changes to the appeals system would have been ‘unfair and manifestly unjust’.
Rigby predicted that if the curbs on the number of appeals had gone ahead it would have resulted in a judicial review.
The Welsh Assembly has already shelved the controversial plans amid widespread concerns over fairness.
FOUR in five of England’s top pubs could be slammed with crippling business rates hikes over the next five years, according to the Campaign for Real Ale.
Camra has called for Chancellor Philip Hammond to provide immediate support for pubs, combined with a review of a business rates system ‘that both fails to recognise the valued role of pubs in community life and penalises successful publicans’.
Camra has calculated how the business rates revaluation, effective from April 1, will affect the top 16 finalists from the last four years of its national pub of the year competition. It has concluded that the awardwinning pubs face an average 84 per cent rise to their rateable value.
Overall, 44 of the top 55 pubs in the country will see their rateable value increase. The Baum in Rochdale, the pub of the year winner in 2012, will see its rateable value rise by a whopping 377 per cent. The Sandford Park Alehouse in Cheltenham, the 2015 winner, will see its go up by 181 per cent.
Properties with a rateable value of less than £12,000 will be exempt from business rates from April 1 2017, while those with a rateable value of between £12,000 and £15,000 will be able to get a reduction. The increases will be phased in over the next five years, with bills increasing by up to 43 per cent next month.
Camra is calling for urgent action in this week’s Budget to assist affected pubs, including a £5,000 rate relief and greater funding for transitional caps to help reduce increases in bills.
Camra is also calling for a fundamental review of business rates to address the burden on pubs and to ensure that successful landlords are not penalised for ‘creating pubs that are the beating heart of so many local communities’.
Camra chief executive Tim Page said: ‘We need immediate action in this week’s Budget to ensure the future of England’s best pubs.
‘A business rates system for pubs which punishes and discourages excellence is in no one’s interest.
‘There is a real risk that these huge increases will put some of the best pubs in the country out of business, causing irreparable harm to local communities and a loss of significant tax revenue for the Government. The unique way in which pub business rates are calculated means that there is a serious injustice to successful publicans and the local communities that they serve.’