More than 133,000 businesses are still waiting for an appeal of their business rates valuation from 2010 to be resolved, council leaders reveal today.
More than 1 million businesses have challenged their business rates bill since 2010. The Local Government Association said figures published this month show 133,060 appeals have still yet to be ruled on.
Councils do not set business rates or rule on challenges by businesses making appeals. But the result of appeals is that councils must set money aside by diverting funding from delivering the services that local taxpayers pay for and expect until appeals are decided.
The LGA said councils have been forced to divert £2.5 billion away from stretched local services over the past five years to cover the risk of business rates appeals, as they have to fund half the cost of any backdated refunds.
Ahead of a Westminster Hall Debate today (Wednesday) on business rates, the LGA is calling on the Government to take the financial risk from business rates appeals away from local government.
The LGA said government plans to allow councils to keep more of the business rates they collect, a move which has been long-called for by local government, makes it even more imperative for reform of the system to protect councils from the growing and costly risk of appeals. This is because they may become liable to pay back even more of the cost of any backdated refunds.
Council leaders are also recommending a time limit for appeals, except in exceptional circumstances. In Scotland, there is a six month time limit for businesses to appeal their valuation.
Alongside reviewing the process for appeals and clearing growing backlogs, the LGA is also urging the Government review of business rates to:
- Modernise the way business rates affect different ratepayers, to ensure that sectors such as online businesses make a fair contribution and that councils are given maximum flexibility on reliefs.
- Tackle the issue of business rates avoidance, which the LGA estimates leads to the loss of £230 million each year.
Cllr John Fuller, Vice Chairman of the Local Government Association’s Resources Board, said:
“Ongoing delays in tackling business rate appeals from 2010 are heaping further financial uncertainty and pressure on our local services at a time when every penny counts to give councils the best chance of protecting services over the next few years.
“It is right that a business is able to challenge their valuation if they genuinely believe it to be incorrect.
“Despite not setting business rates or ruling on appeals, councils are having to take billions of pounds away from already stretched local services, such as adult social care, protecting children and supporting businesses and boosting local growth, to cover the financial risk and uncertainty arising from this backlog of appeals. This is completely unfair.
“As we move towards a system where councils will keep more of the business rates they collect locally, communities need to be protected from the shifting of resources to address the risk of business rates appeals. With local government in England facing an overall funding gap that will exceed £5 billion by 2020, this money is needed to fund vital services and help plug growing funding gaps.”
- Notes to editors