Business leaders have condemned proposed plans to stop appeals against incorrect business rates calculations – a move that could see SMEs hit with more than £700 million in “unfair” taxes.
The “reasonable professional judgement” provision would mean that retailers would be unable to dispute a rates bill if the margin of error was within 15 per cent.
Property consultancy Daniel Watney LLP and Blackstock Consulting have estimated that this could cost small firms in England more than £700m over the next five years, using Valuation Office Agency data.
Eight trade bodies, which included the Federation of Small Businesses (FSB and the British Retail Consortium (BRC), have expressed their outrage over the reforms as even a small percentage difference in a rates bill could mean the difference between firms paying something and nothing at all.
Debbie Warwick, head of rating from Daniel Watney LLP, said: “For most businesses, rates are the third largest expenditure and for any ratepayer an overpayment of 15 per cent will impact profitability.
“Rating professionals fully understand the need to reduce the number of spurious appeals, especially at a time when the VOA is dealing with year after year of budget cuts. This can be remedied by helping ratepayers better understand the basis of their assessment from the outset and demonstrating that their assessment is fair in relation to others.”
Martin McTague, policy director at the FSB, added: “We welcomed the Government’s ambition to make the business rates appeals system fairer and easier to navigate. However, it is hard to see how this proposal helps to achieve that aim. We believe this clause simply fails the fairness test and could result in the door being shut on small businesses, which want to correct inaccuracies in valuations and reduce their rates bills. This research shows that businesses that are already struggling could be pushed into insolvency, with smaller firms particularly at risk.”