Why the new Non-Domestic Rates Bill won’t solve the business rates question
By
John Webber
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The new Non-Domestic Rates Bill was laid before Parliament last week and is expected to have its second reading in the House of Commons on 24 April.
The bill came about following the 2020 business rates review and states there will be:
More frequent revaluations.
Administrative reforms to deliver a sustainable shorter revaluation cycle, enabling more accurate rating lists and the disclosure of more information to ratepayers about their business rates valuations.
Measures to support decarbonisation and investment, including a relief for low carbon heat networks and a new improvement relief. From April 2024, ratepayers will not see an increase in their rates bill from qualifying improvements made to their property for 12 months.
Support announced by the government at Autumn Statement 2022, including a three-year transitional relief scheme. The bill removes the statutory requirement for revenue neutrality within transitional relief, with the removal of downwards transition.
The Digitalising Business Rates project, which is to modernise the business rates system, improve the targeting of rates relief, generate better data for central and local government and help to improve business rates compliance.
Improvements to the administration of business rates, including replacing RPI with CPI as the measure of inflation used in the annual indexation of the multiplier.
On the surface these changes look positive. We have long been fans of more frequent revaluations and the removal of downwards transition; although ideally, we would prefer annual revaluations if rates bills are to be a more accurate reflection of rental levels. The relief for low carbon heat networks and the new improvement relief scheme are also in the right direction – although we would argue limiting the relief for only 12 months is unlikely to encourage long term investment.
However, on closer inspection, we have large concerns about the bill including the administrative burden put on the rate payer with the new requirements for the annual provision of information and the “duty to notify” whereby businesses will not only need to confirm the physical details of the property on an annual basis but also provide updates on rents and lease information as well as trading information, even where there have been no changes.
Now an additional 700,000 businesses, who currently pay no business rates due to reliefs, will have to send information to the VOA in a bureaucratic exercise, which won’t result in any increase in the business rates tax take- just cause them an administrative headache.
And this new regime is backed up with penalties and onerous fines for failure to disclose properly which could run into tens of thousands of pounds, with the ultimate sanction of imprisonment for false statements.
Meanwhile no similar obligations have been placed on the VOA to produce its assessments quickly and any timetable associated with transparency is silent. The government has also said nothing about speeding up the appeals system or any timetable to achieve this.
This bill overall therefore represents a complete change around in terms of the obligations on the VOA – obligations which are now being put on the ratepayer.
Furthermore, unless the government does something about the issue of rogue surveyors, we fear these new demands could give a green light to cowboy rating advisers taking advantage of businesses now even more unsure of how to negotiate the complex business rates system and claiming to “advise” businesses through the paperwork.
Meanwhile the bill says nothing about tackling the real issue with business rates- that it is overburdensome and just too high a tax on business – a plus 50p in the £ tax. Unless the government reduces the multiplier to levels businesses can afford – say 34p in the £ – none of the above changes will make a significant improvement for businesses.
We will be continuing our lobbying campaign among MPS as this bill makes its way through Parliament.
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Why the new Non-Domestic Rates Bill won’t solve the business rates question
By
John Webber
Share this:
The new Non-Domestic Rates Bill was laid before Parliament last week and is expected to have its second reading in the House of Commons on 24 April.
The bill came about following the 2020 business rates review and states there will be:
On the surface these changes look positive. We have long been fans of more frequent revaluations and the removal of downwards transition; although ideally, we would prefer annual revaluations if rates bills are to be a more accurate reflection of rental levels. The relief for low carbon heat networks and the new improvement relief scheme are also in the right direction – although we would argue limiting the relief for only 12 months is unlikely to encourage long term investment.
However, on closer inspection, we have large concerns about the bill including the administrative burden put on the rate payer with the new requirements for the annual provision of information and the “duty to notify” whereby businesses will not only need to confirm the physical details of the property on an annual basis but also provide updates on rents and lease information as well as trading information, even where there have been no changes.
Now an additional 700,000 businesses, who currently pay no business rates due to reliefs, will have to send information to the VOA in a bureaucratic exercise, which won’t result in any increase in the business rates tax take- just cause them an administrative headache.
And this new regime is backed up with penalties and onerous fines for failure to disclose properly which could run into tens of thousands of pounds, with the ultimate sanction of imprisonment for false statements.
Meanwhile no similar obligations have been placed on the VOA to produce its assessments quickly and any timetable associated with transparency is silent. The government has also said nothing about speeding up the appeals system or any timetable to achieve this.
This bill overall therefore represents a complete change around in terms of the obligations on the VOA – obligations which are now being put on the ratepayer.
Furthermore, unless the government does something about the issue of rogue surveyors, we fear these new demands could give a green light to cowboy rating advisers taking advantage of businesses now even more unsure of how to negotiate the complex business rates system and claiming to “advise” businesses through the paperwork.
Meanwhile the bill says nothing about tackling the real issue with business rates- that it is overburdensome and just too high a tax on business – a plus 50p in the £ tax. Unless the government reduces the multiplier to levels businesses can afford – say 34p in the £ – none of the above changes will make a significant improvement for businesses.
We will be continuing our lobbying campaign among MPS as this bill makes its way through Parliament.
John Webber is head of business rates at Colliers
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