Executive Summary

Robert Hayton BSc(Hons), MRICS Head of UK Business Rates

Another year and another review of the business rates system; with Government continuing its plans to publish a call for evidence for a “fundamental review of business rates” at some point in late Spring or the Summer, despite other tax policy consultations being delayed as a result of COVID-19.

UK businesses cannot afford another long review that ultimately, somewhat inevitably, fizzles out and nothing changes. Fundamental alterations, let alone scrapping the tax as many have called for, is hard for any Government to implement, even in the medium term, when the tax generated for them is so precious. We need to ensure that the “fundamental review” isn’t a smoke screen for ‘keep it all the same’.

The underlying fundamentals of the business rates system are sound. It is a tax on physical property, calculated by reference to market rental values. It supports the long-term stability of the economy, funding public services in a much less distorted way than other taxes. Business Rates are difficult to avoid and easy to collect.

At Altus Group, we believe the primary focus for the Government should be meaningful reform that can be delivered quickly to benefit ratepayers immediately. Small changes, such as those discussed in this review, will revitalise the system and enhance the core essentials of fairness, certainty, swift correction of errors and, over time, affordability. “ Meaningful reform is achievable and within our grasp. “

The Altus Group Annual Business Rates Review sets out several key fundamental reforms. From ending annual inflationary rises to the tax rate and removing gradual phasing-in of large tax reductions to incentivising, rather than penalising, investments which benefit the wider environment and climate change goals.

Small, fully costed changes, which would bring maximum benefit to the ratepayer in the longer term, with fairness at their core. In the meantime, it is imperative that the appeal system rectifies incorrect assessments quickly and more efficiently, as it was intended to. Our real and continued concern is the unnecessary delays created at the Challenge stage of the process.

There was a record number of 1,100 Challenges settled in March. That is up 47% on February’s 750 settled Challenges and up 72% on the 640 Challenges settled in January. Whilst this is a step in the right direction, more Challenges continue to be made than settled.

If this trend continues, the situation will become desperate. High volumes of unnecessary cases will be referred to the independent Valuation Tribunal; exactly what the new system was designed to prevent.

But equally the here and now is more important than ever before, as businesses fight for survival. Whilst the retail, leisure and hospitality sectors have received Government assistance to reduce their business rates bills during 2020/21, many have not – despite COVID-19 affecting all ratepayers.

A catastrophic fall in demand has resulted in the rental value of many buildings reducing dramatically, causing a structural change in the property market which we believe constitutes a material change in circumstances.

It’s against this backdrop, over the coming weeks, we will be leading the biggest ever group-based challenge to the business rates system.

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Apr 19

Outstanding Business Rate Challenges in England

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