Setback for firms seeking review of business rates

HOPES for wholesale reform of Britain’s antiquated business rates system have received a blow after it emerged that civil servants were pressing ahead with a revaluation of the country’s offices and factories.

The Valuation Office Agency, which measures the level of business rate tax for individual companies, said it was more than a quarter of the way through its revaluation and expected to post draft lists by next September.

The review, which is scheduled to come into effect in 2017, is expected to cost £26million this fiscal year.

But the activity at the Agency, which was revealed under a Freedom of Information request, will alarm those who were still hoping the tax would be replaced with a fairer system.

Paul Turner-Mitchell, a leading business rates expert who filed the FOI request, said: ‘The implication is that either the Valuation Office is wasting its money with a revaluation that may eventually be scrapped, or that it does not realistically expect any further changes to come from the Treasury that will materially impact the revaluation process.

‘The former would be a concern, but many would regard the latter scenario as a potential disaster for businesses.’

The Agency, which comes under the auspices of the Department for Communities and Local Government, said it had already revalued 474,000 of the 1.8 million business properties.

In response to the request, it said: ‘The Government’s structural review for business rates has not had any effect on revaluation 2017.’

The current system, which is based on property value, has been criticised for placing too much burden on property-based sectors, such as retail, while new technology firms escaped lightly. Steel plants in Britain are particularly affected as they pay higher rates than those in other countries.

Hopes of a full review were raised in March by an announcement of a ‘structural review’, when former Chief Secretary to the Treasury Danny Alexander said: ‘The time has come for a radical review of this important tax.

‘We want to ensure the business rates system is fair, efficient and effective.’

The announcement last month by Chancellor George Osborne that control of business rates would be devolved to local authorities fuelled suspicions that radical reform may no longer be on the Government’s agenda.

But a Government spokesman said last night that the review into business rates reform was continuing and the current revaluation was a ‘legal requirement’.

‘The 2017 revaluation exercise was taken into account and confirmed when the business rates review was launched,’ he said.

‘The revaluation is consistent with this wide-ranging review, which aims to consider the long-term future of business rates and will be concluded by the end of the year.’