Business rates shock: now pay even if bill is WRONG

New Government edict blocking appeals is set to cost firms billions

THE Government plans radical changes to business rates, which could cost firms billions of pounds by blocking them from appealing against their rates bills – even those known to be wrong.

The overhaul of the system has been condemned by a consortium of business groups representing hundreds of thousands of firms, which predicts it will result in companies being forced to close.

Ten business organisations including the Federation of Small Businesses said the new rules would mean any appeal within a specified margin of error – expected to be about 15 per cent – would be automatically thrown out.

Melanie Leech, chief executive of the British Property Federation, said the latest plan meant ‘businesses and jobs would suffer’.

The criticism comes ahead of next week’s Autumn Statement when Chancellor Philip Hammond is expected to reveal a budget shortfall of up to £100billion over the next five years as a result of Brexit.

There have been years of bitter complaints about the £26billion-a-year business rates system. Sharp rises in rates bills and a delay in revaluations have been blamed for undermining firms and compounding misery on high streets.

The Government’s plans would slash the number of appeals and help it reduce the backlog of 280,000.

Jerry Schurder, head of business rates at consultancy Gerald Eve, said: ‘These wildly unfair proposals represent the Government’s intention to grant itself the equivalent of papal infallibility and legislate away its errors.’

However, companies in Scotland will not be affected. Business rates are devolved and power was further transferred to the country’s 32 local authorities last year – which means that councils can even reduce business rates.

The criticisms are based on analysis by property adviser Daniel Watney of 35,000 small firms paying less than £7,000 a year in rates. It estimates they would be overcharged by £700million in the next five years as many would be refused appeals that could take them below exemption thresholds.

However, one source said the total overcharged from the imposition of the new clause would easily

be ‘double that amount and would likely run into billions’.

Martin McTague, policy director at the Federation of Small Businesses, said: ‘This clause could result in the door being shut on small businesses which want to correct inaccuracies in valuations and reduce their rates bills.

‘Businesses could be pushed into insolvency.’

Meanwhile, business rates specialist CVS attacked the Government for planning to raise the amount taken from firms to provide compensation in successful appeals by 10 per cent while slashing the number of appeals.

A Department for Communities and Local Government spokesman dismissed criticism as ‘scaremongering’ and added: ‘Our reforms will streamline the process to help resolve cases as quickly and fairly as possible.’