Over the Christmas period there was a lot in the papers about business rates as we build up to the new financial year starting in April, when businesses in England and Wales will start paying rates based on the latest revaluation. While a lot of the media coverage talks about the pounds and pence increases, the underlying issue remains that two years ago the government committed to undertaking a fundamental review of business rates and we’re yet to see clarity on the results.
One of the biggest issues to be addressed is that, under the current system, if you improve your store your premises is deemed to have increased in value, and your rateable value and rates bill will go up accordingly. Surely one of the ways a tax system should work is to encourage investment.
The lingering problems with the business rates system are made worse by proposals to reduce the number of appeals against business rate valuations. I have some sympathy with the government’s desire to cut down on the appeals that clog up the system, are time consuming, and have created an industry of speculative appeals initiated by (a minority of) agents seeking fees. But we also can’t expect businesses to take excessive rates bills on the chin. It’s not acceptable to deny businesses the right to challenge what may be unfair rating assessments.
The government should go back and look at whether the business rates system is incentivising investments, delivering fairness, and whether specific rating schemes in areas such as forecourt stores and ATMs are fit for purpose.