Business rates update 23rd January 2015

The clock is ticking on a deadline which could cost UK businesses over £1.75bn, according to business rate specialist CVS, and businesses in Birmingham could be worst affected. Since the Chancellor introduced new regulations for business rates appeals in the 2014 Autumn Statement, firms will be unable to claim refunds to which they had previously been entitled if they do not submit appeals by 31 March.

Approximately 210,000 properties across England and Wales have yet to appeal their business rates meaning that over £1.75bn of refunds which could be potentially returned to businesses are at risk of lying unclaimed and the over-payments staying with HM Revenue & Customs. “The vast majority of businesses are well aware that they can claim refunds on overpaid business rates because of the discrepancy between previous property valuations and actual business rates bills,” says Mark Rigby, Chief Executive of CVS. “However, crucially there are now only two months left to submit appeals for the 47% of properties where no action has been taken and, because of the Chancellor’s new regulations, where £1.7bn in refunds is at risk of being potentially missed.”

CVS is issuing a ‘use it or lose it’ warning to business to take action now or risk missing out: -Over 210,000 properties from the current Rating List have yet to have appeals made to challenge – and potentially reduce – their business rates. -This is equivalent to 47% of eligible commercial properties with a rateable value over £20,000. -Birmingham has the greatest percentage (81%) of unappealed properties, equating to 37,365 properties and a potential total refund value of £117m. -In other leading centres, Manchester has 75% of eligible properties unappealed (totalling a refund value of £87.5 million), Cardiff has 75% of eligible properties unappealed (totalling a refund value of £61 million, and the City of London has 65% of eligible properties unappealed (totalling a refund value of £210m) “The business rates system is bureaucratic, complicated and, in many respects, unfair,” adds Mark Rigby. “This latest move by the Chancellor slams the door on more than 210,000 properties where bills could have been potentially calculated incorrectly and businesses already struggling to manage overheads might have substantially overpaid. We are saying to businesses, ‘wake up, take action, and don’t miss out’. With pressure on businesses so great at the moment, the last thing they need is a tax grab from Government which this blatantly is.” The Government has promised widespread reform of business rates to improve transparency and fairness. A review is currently taking place following major industry consultation during 2014. The inaccuracy of the current system for calculating and charging business rates is highlighted by there being a total of 673,970 appeals lodged on the current Rating List.

Separately, John Webber, Head of Rating at Colliers International, fears most businesses are unaware of a Government-imposed deadline of 1 April 2015 for appeals on their business rates valuations. The deadline was “almost lost in the small print” of the Chancellor’s Autumn Statement in December 2014 with “certainly no attention drawn to it,” said Webber. “Despite having extended the time period for the revaluation of businesses on the ratings list from five to seven years (extended to 2017) they haven’t extended the period where businesses are entitled to appeal,” he added. “This means that whilst businesses will still be able to appeal between April 2015 and 2017, any refunds or savings will only be backdated to April 2015, meaning that businesses could lose out on five years’ worth of rebates. “Making this announcement only weeks before the cut off is scandalous. The Government wants it both ways – an extension to the list but no extension to the appeal deadline.” Webber said that the Government had not explained why this decision was made but believed it was designed to curtail the ability of businesses to appeal while giving it more certainty about what it collects in tax. He said: “Most businesses won’t be aware of these changes. They haven’t been publicised and there are genuine concerns that less business rate savvy companies will really lose out. “We worry that the new deadline will cause panic with ‘cowboys’ in the industry persuading clients to appeal en-masse to the Valuation Office without the due diligence which could result in an increase in rates liability – ironically, also dating back five years.”