The government has been accused of “ripping up the rulebook” by ruling out Covid-related appeals against business rates bills.
The government had been facing hundreds of thousands of appeals on the grounds of a ‘material change of circumstance’ in the pandemic, estimated by the Rating Surveyors’ Association to be worth £5bn.
Yesterday the Treasury said it would legislate against such appeals and instead provide a new £1.5bn business rates relief fund for companies worst hit in the pandemic. The fund is to be distributed by local authorities to firms that have not been able to benefit from the £16bn in business rates relief already announced for retail, hospitality and leisure in the pandemic.
The move has been welcomed by foodservice wholesalers, a sector that has been excluded from business rates relief so far, and which was highlighted in the government’s announcement as standing to benefit.
However, retail and property industries are focused on the £5bn denied in appeals, saving the government an estimated £3.5bn. It leaves companies facing business rates bills based on 2015 rental values until 2023, when the next revaluation is due, according to BRC property policy advisor Dominic Curran.
“The new announcement means that by 2022/23, many tenants will be paying rates based on seven-year-old valuations, with no recourse to appeal where those are out of sync with market rates,” said Curran.
Colliers head of business rates John Webber said: “The government is ripping up the rule book retrospectively. It is the wrong thing to do on every level.”
Webber said businesses had already negotiated rebates with the Valuation Office Agency on the grounds lockdown restrictions presented a material change of circumstance. “To now deny this retrospectively because the numbers are too high is deeply shocking,” he said.
Robert Hayton, UK president of property tax at real estate advisor Altus Group, said: “This will be a catastrophic blow for businesses who have spent the last year lawfully pursuing business rate adjustments only to have their statutory legal right ripped from them.”
The Treasury said allowing the appeals “could have led to significant amounts of taxpayer support going to businesses who have been able to operate normally throughout the pandemic”.
“Our priority throughout this crisis has been to protect jobs and livelihoods,” said Chancellor Rishi Sunak. “Providing this extra support will get cash to businesses who need it most, quickly and fairly.
“By providing more targeted support than the business rates appeals system, our approach will help protect and support jobs in businesses across the country, providing a further boost as we reopen the economy, emerge from this crisis, and build back better.”
Communities secretary Robert Jenrick said: “This is the fastest and fairest way of getting support to businesses who need it the most.”