According to business groups, new business rates legislation (proposed in the Government’s Enterprise Bill) will increase the administrative burden on small firms and act as a “barrier to justice” for businesses seeking to appeal.
The bill contains three new measures which have all been criticised for “riding roughshod” over the needs of UK businesses.
Small firms have long called for more transparency around how business rates, or tax on commercial property, is measured. But critics claim the bill has failed to address this issue; instead allowing the Valuation Office Agency – which handles business rates appeals – to share information around how rates are measured with local authorities but not with the individual businesses.
The Government is seeking to discourage business rates appeals from being made by introducing an upfront fee in a bid to reduce the number of active investigations in the system; currently 200,000.
Finally, the bill proposes a “civil financial penalty” on any firm that “knowingly, recklessly or carelessly provides information, which is false in a material particular.” But this could affect innocent business owners who are confused by the system.
The UK’s leading business groups have criticised the Government for attempting to push through draconian changes that were abandoned in the face of industry opposition in 2013.
“The current business rates system harms companies by relying on a decades-old model that no longer reflects economic conditions, which has made life tough for retailers in particular,” said Rhiannon Jones, the Principal Tax Policy Adviser at business lobbying group CBI.
A recent poll of 100 retail businesses by the British Retail Consortium found that 95 per cent believed a reform of business rates would boost the nation’s productivity. Retailers are now paying £2.40 in business rates for every £1 in corporation tax.
Business rates are forecast to bring in £28 billion this year to the public purse. George Osborne announced in the Summer Budget that retailers would face a £4.9bn increase in business rates – equivalent to 17.5pc – by 2020.
Business rates, which date back to 1601, are currently calculated according to rental values.
Link: Business rates
