Now firms face ‘self-assessment’ burden for rates
HUNDREDS of thousands of small firms will be forced to assess their own business rates under plans being drawn up by the Government to pass the red tape of calculating the £26billion tax on to business.
The switch, which would be similar to the move to self-assessment for individuals liable for income tax, is thought to be the Government’s preferred choice for overhauling the unpopular business rates system, which has become a focus of business anger in recent years.
About two million premises would be affected by the changes affecting firms south of the Border.
In Scotland, firms warned last week they could face liquidation because of crippling increases in business rates. The first revaluation of property values in Scotland since 2010 has left some facing tax hikes of up to 260 per cent, when changes come into force in April.
In England, the latest plans would allow the Government to cut the cost of running the Valuation Office, which is overseen by the Department for Communities and Local Government. It would also enable it to increase the frequency of revaluations – possibly to annual reviews – compared with once every five years at present.
One source, who declined to be named, expected the Department to press ahead with the self-assessment plan, with an announcement likely in the Budget in March.
John Webber, head of ratings at property consultant Colliers International, said: ‘My understanding is that the Government is now seriously looking at self-assessment and that it is now the favoured option.
‘The official line is that it’s looking at other options. But our understanding is that it has been discussing with the “Big Four” accountancy firms how self-assessment works in the sphere of personal taxation and corporate tax and how it could apply the same principles here,’ he said.
The Mail on Sunday has separately learnt that major accountancy firms submitted responses to the Government inquiry into the future of business rates. However the documents, and a host of other submissions, have yet to be published on the Government’s website and it is not clear when or if they will be released.
Although self-assessment would create a new layer of red tape for companies, an annual review of rates would be widely welcomed. It would remove shock swings in bills, such as those currently facing London-based businesses, where property values have risen significantly in recent years and rates with them.
Self-assessment is likely to be a headache for both large and small businesses, which would need to find extra resources to conduct the assessment. Those that failed to provide the right information would face ‘a swingeing system of penalties and fines’, one business rates specialist said.
A spokesman at the Department for Communities and Local Government said: ‘There are no plans at this time to introduce self-assessment. However, this Government is committed to ensuring the system for business rates is fair and accurate, and will consider all options in order to do this.’