Latest Business Rates review branded insufficient
A stark warning has been issued over the Government’s latest business rates review
Widespread concern has been voiced within the Rating sector over the most recent Government review on business rates as insufficient, and there is hope that sector businesses will respond before the 22nd February deadline.
The review is set to take place at the end of October, but there is already serious concern that the review will have consequences that will have serious ramifications for businesses.
Several facets of the review are subject to intense scrutiny, including the measures to impose more frequent revaluations.
Many business rates experts welcome the Government’s commitment to migrate towards more frequent revaluations from 2023, when it will implement a three-yearly revaluation cycle, the trade-offs (for enabling the Valuation Office Agency (VOA) to undertake their responsibilities in a shorter timeframe), will be reduced appeal rights and increased administrative responsibilities on ratepayers.
The proposals indicate that ratepayers will be required to provide not only confirmation of physical details on an annual basis but also deliver updates on rent and lease information, as well as trading information — even when there have been no changes
It goes without saying that this will pass a significant bureaucratic burden onto the ratepayer, and there is a question mark over whether this will be beneficial to UK business overall.
There are currently around 1.9 million ratepayers, and of those some 700,000 pay no business rates. These proposals will result in some 700,000 businesses being required to submit at least one sample of information to the VOA every year. This engages them in a bureaucratic exercise where the information is unlikely to be used and will have no obvious effect on the amount of business rates collected.
At a time when business was promised to be relieved of red tape in a post-Brexit world, the Government seems to be proposing the opposite for many businesses.
There is a serious concern that the VOA will be wasting time trawling through this vast amount of information instead of setting rateable values at correct and fair levels or dealing with appeals in a timely way, not to mention potential sanctions and penalties that might be imposed should businesses either not return the information or do so outside of any specified time period, or a late or no return of any annual request could resulting in a dismissal or preclusion of any appeal. There is little indication from the Government to impose similar time deadlines on the VOA. A potential lack of transparency at the VOA is also cause for concern.
Improvement relief is also an area where concern might become prevalent. Although the Government is taking steps towards outlining how it will introduce improvement relief, targeted at qualifying works that ratepayers carry out to their premises, as a step in the right direction, there is doubt about the extent of any such relief, particularly as developers and landlords are exempt from it.
So far as investment in green plant and machinery is concerned the recommendations have been maligned with narrative that they should go beyond introducing several green measures to exempt plant and machinery used in on-site renewable energy generation and electricity storage.
Meanwhile, the Government has also proposed several relatively minor administrative changes that seem of little consequence — but these could result in considerable challenges is if the Government decides to make it easier for the VOA to change the valuation approach to certain types of property and create a back door as a mechanism of raising more revenue.
In conclusion the Government continues its overall failure to deliver the much-needed fundamental business rates reform last autumn and replacing it with this consultation is desperately disappointing. We urge all interested parties to let the government know this and to respond before the consultation ends next week or they could find themselves snarled up with extra expense and administration.