In 2015, George Osborne, announced to the Conservative Party Conference that the Business Rate system would be reformed with the Business Rates being devolved to local authorities. This £26 billion of tax would then be in the hands of Local Authorities who could adapt and choose their local charges and policies in order to benefit them and their communities.
The Communities and Local Government Committee have issued a report stating that there are a range of issues which need to be addressed before such a change can be brought about.
With a target date of 2020, there are a number of matters that need to be addressed prior to implementation. These will have an effect on property law, valuation and administrators.
One recommendation of the committee was to keep the Revenue Support Grant which helps fund certain council activities. Â Without this grant the Councils Business Rates Income will all be required to fund its budget, thus preventing the council being able to vary rates (and lower rates in some areas), thereby encouraging economic growth in areas that need more support.
The flexibility for the Local Authority to vary rates depending upon the type of business which is paying them, was also recommended. As the rateable values are assessed infrequently at best (2010 being the latest) this can significantly distort the proportion of taxation over time.Â
It was also pointed out that there is a massive problem with the levels of Business Rate Appeals which have been repeatedly ignored by the Government. The level of appeals could even dwarf the actual income from the scheme.
The Local Government Association have indicated that nearly 900,000 businesses have challenged their business rates assessment since 2010 which indicates that the scale of these processes – if not correctly organised and implemented – could swamp the system.
Clive Betts, the chair of the Committee, said: “The Government must address the alarm of councils, which are understandably worried that their spending needs and the funding of their local services will not be supported by their business rates revenue.
“Similarly, the issue of appeals is of significant concern to local authorities and it is essential that it is resolved before the Government pushes ahead with business rates changes.â€
The Department for Communities and Local Government plans to consult on the possible changes to the Business Rates System this summer.
A senior surveyor dealing with Business Rates has voiced concerns over the transparency of the evidence used by the Valuation Office Assessment, as well as concerns over the clear, quick and smooth appeal structure, both of which are essential in order for the changes in the system to really benefit Local Government and the wider business community.
*Back to June 2016 Newsletter*
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