Trade bodies call for controversial ‘reasonable professional judgement’ clause to be dropped
The UK’s most prominent trade bodies – including the CBI, British Retail Consortium, the Federation of Small Businesses, British Chambers of Commerce, Revo and the British Property Federation – have called on Parliament to drop a controversial proposed change to the business rates appeals system that would leave firms facing unfairly high liabilities – even if they could prove their bills should be lower.
In a letter sent to Parliament today, the signatories have called on the Joint Committee on Statutory Instruments to reject Government proposals seeking the right to dismiss any appeals against incorrect valuations that are deemed to be within the bounds of ‘reasonable professional judgement’ – even if an overvaluation can be proved.
The allowable margin of error has not been revealed but experts suggest it could be as much as 15%. Based on the outcome of successful appeals following the 2010 revaluation business rates specialists at Gerald Eve have calculated this could lead to companies overpaying by as much as £1.9 billion over the next five years.
The revaluation comes into effect in just six weeks’ time (on 1 st April), with ratepayers still none the wiser as to how appeals will be determined, despite a consultation into the proposals closing last autumn. The delay is not only a source of considerable uncertainty, but is also raising concerns that the proposals will be pushed through at the last minute. The letter is a pre-emptive measure to ensure proper Parliamentary scrutiny.
Jerry Schurder, head of business rates at property consultancy Gerald Eve, said: “The Government’s outrageous proposals, designed to legislate away its errors, are unprecedented in UK taxation and would force hard-pressed businesses to cough up an extra £1.9 billion to pay for the Valuation Office Agency’s mistakes. The Government seemingly has no confidence in the VOA’s assessments, in which case it needs to reform the VOA or the rating system, not penalise firms by outlawing appeals.
“Individuals would never tolerate overpaying their income tax when it could be proved an error had been made, and it is unacceptable that the Government expects firms to pay up and shut up in this manner. The way that trade bodies from a wide spectrum of industries have been motivated to unite against this clause shows the strength of feeling against what is a punitive and deeply unfair proposal.”
Roger Cohen, real estate partner at international law firm Berwin Leighton Paisner, added: “This is a fundamentally unjust proposal which flies in the face of assessing rateable values with accuracy. In our letter, we challenge the lack of clarity in the draft regulations and question the legal authority of the Minister to make this change. We are asking a Joint Committee of both Houses of Parliament to say “no, minister”.”
The full list of signatories to the letter:
- Confederation of British Industry
- British Retail Consortium
- Federation of Small Businesses
- British Chambers of Commerce
- British Property Federation
- Association of Convenience Stores
- Business Centre Association
- British Beer & Pub Association
- Association of Licensed Multiple Retailers
- Royal Institution of Chartered Surveyors
- Institute of Revenues, Rating & Valuation
- Rating Surveyors’ Association
- Property Litigation Association
- Gerald Eve
- Berwin Leighton Paisner
- Daniel Watney
- Cushman & Wakefield
- Montagu Evans