Firms to overpay millions as government seeks rates appeals veto

New proposals would grant power to dismiss appeals against business rates.

Reforms could see hundreds of thousands of firms condemned to unfairly high bills.

Proposed changes to the business rates system would effectively outlaw appeals, condemning hundreds of thousands of firms to overpaying their rates bills – even when they can prove they should be lower.

England has the highest appeal rate in the world at well over 50%, with 979,170 challenges made since the 2010 revaluation against the 1.83 million properties liable for business rates. The Government is seeking radical, and in this case unjust, ways of reducing the number of challenges lodged.

Under the reforms, appeals against next April’s revaluation assessments which fall “within the bounds of reasonable professional judgement” can be dismissed – giving an effective veto over challenges where the claimed valuation is deemed to be close enough to original assessments. Similar proposals were put forward by the Government in 2000, but were abandoned following consultation due to their unfair nature.

By forcing businesses to pay the higher, incorrect bills – even when they can show that their assessments should be lower – the Government is effectively legislating for firms to pay for any mistakes made by the Valuation Office Agency (VOA).

Not only would the proposals remove any incentive for the VOA to compromise on appeals that are made, it also encourages the Government agency to over-value properties in the first place, safe in the knowledge that as long as an assessment is within an ambiguous margin, a challenge will be dismissed.

Jerry Schurder, head of business rates at 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, making hard-pressed businesses pay for the VOA’s mistakes. The Government seemingly has no confidence in the VOA’s assessments, in which case it needs to reform the VOA or the system, not penalise businesses by outlawing appeals.

“The lack of definition of ‘reasonable professional judgement’ gives carte blanche for appeals to be dismissed, condemning firms to unfairly high bills without recourse. The fact that the changes would see companies overpay their business rates even when able to demonstrate their bills should be lower is a damning indictment of the Government and symptomatic of its track record of ignoring businesses’ calls for a reduced burden.

“The Government is telling businesses to pay up and shut up, which is quite preposterous. Imagine the outcry if employees could show that they were paying too much income tax but had no means to reduce their payments. We call on the Government to remove this manifestly unjust proposal, and will be working hard with clients and business groups to lobby for this to be overturned.