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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.

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.

(Public Sector Executive)

Chancellor suggests 'staircase tax' could be axed

The Chancellor, Phillip Hammond, has suggested that the controversial staircase tax could be axed, admitting it adds business uncertainty. He said, during a Treasury Committe hearing today, that he is "certainly looking at" legislative steps to end the staircase tax. "The Court has made a decision and the Revenue is obliged to comply with the rating law. It is open to Parliament to consider changing the law in a way that changes that outcome." 

The Federation of Small Businesses (FSB) has welcomed the Chancellor's comments. Mike Cherry, national chairman, said "The staircase tax has heaped misery on thousands of small businesses that happen to occupy split workspaces. The Chancellor's words will come as welcome relief to the desperate firms who had absolutely no idea that bill hikes were coming down the line. The Chancellor's decision marks a victory for common sense - he's done the right thing. We look forward to his words becoming action at the Budget, if not before."


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