National and Devolved Politics

13.06.18

Unresolved business rates appeals divert £2.5bn away from public services

Over 130,000 business rates appeals from 2010 remain unresolved, according to the LGA.

In the past eight years, over a million businesses have challenged their business rates bills, but the latest figures show that 133,060 appeals have yet to be ruled on.

Although councils do not set business rates or rule on challenges made by businesses, the result of appeals is that they must set money aside, which diverts funding from delivering the services that local taxpayers pay for and expect.

The LGA has said that £2.5bn has been diverted away from stretched local services over the past five years to cover the risk of business rates appeals as they have to fund half of the cost of any backdated refunds.

The LGA has been calling for a reform of the business rates appeal system since 2015.

Ahead of today’s Westminster Hall Debate, the LGA called on the government to take the financial risk from business rates away from local government, arguing that government plans to allow councils to keep more of the business rates they collect makes it “even more imperative” for reform of the system to protect councils from the “growing and costly risk of appeals,” 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. Scotland already has a six month time limit for businesses to appeal their valuation.

In addition, the LGA is urging the government to review business rates to modernise the way they affect different ratepayers in order to ensure that sectors such as online businesses make a fair contribution, and to tackle business rates avoidance, which it estimates leads to the loss of £230m each year.

Cllr. John Fuller, vice chair of the LGA’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.”

He called the current system, which sees billions of pounds diverted away from stretched local services, such as adult social care, “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,” he concluded.

Top image: jax10289

 

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