British firms’ business rates fears

Business leaders have condemned planned changes to business rates which could prevent firms from appealing their bills, even if they are wrong.

The system overhaul is now under fire from a consortium of business groups who look after the interests of hundreds of thousands of firms.

There are fears that if the planned changes do go ahead, companies operating within tight margins may be forced to shut down.

Ten business groups, including the Federation of Small Businesses (FSB) are fighting the changes, saying they could have dire consequences for the already struggling British High Street.

Under the new regulations, any appeal of business rates within a certain margin of error – expected to be set at 15 per cent –would automatically be rejected.

Melanie Leech, CEO of the British Property Federation, said the proposals could lead to businesses and jobs suffering.

The changes are set to be announced in Chancellor Philip Hammond’s Autumn statement as he attempts to shore up a £100 billion budget shortfall over the next five years, which has been caused as a result of the decision to leave Europe.

However, the rates system has already come in for heavy criticism. While it raises £26 billion annually, increases in bills and delays in looking at appeals have been blamed for leaving firms floundering and the High Street struggling to fill units.

However, Mr Hammond is expected to say that slashing the number of appeals will not only save the public purse money, but will help to cut the 280,000 appeals waiting to be decided.

The backlog is being partly blamed on staffing shortages in the Valuation Office, which falls under the Department for Communities and Local Government’s (DCLG) remit.

Jerry Schurder, head of business rates at consultancy Gerald Eve, described the proposals as “widely unfair”.

He said they represented “the Government’s intention to grant itself the equivalent of papal infallibility and legislate away its errors.”

Property advisor Daniel Watney looked at 35,000 small firms paying less than £7,000 a year in rates. It estimated that they would be overcharged by £700 million over the next five years because they would be refused appeals which could take them below exemption thresholds, which are make or break for many businesses.

However, a DCLG spokesperson said the criticism was nothing more than “scaremongering,” adding that the changes would mean cases were resolved swiftly and fairly.