William Eichler 17 February 2017

Gov’s planned block on business rates appeals ‘illegal’

Business leaders believe the Government’s planned block on appeals against incorrect business rates valuations may be ‘illegal’ and have urged Whitehall to rethink its policy.

The Government has proposed a ‘reasonable professional judgement’ provision in draft regulations reforming business rates due to go before Parliament in April.

This would mean that ratepayers would not be allowed to appeal an incorrect business rates valuation if it were inside a ‘reasonable margin’ of error.

According to a letter signed by 13 trade bodies, including the CBI, the British Chamber of Commerce, and the British Property Federation, this policy is ‘illegal’ and would leave firms overpaying on their rates bills.

Previous research into the potential impact of this clause has found a 15% margin of error could hit small and medium enterprises by up to £700m in incorrect rates bills.

The charge of illegality is based on two points.

First, what constitutes ‘reasonable professional judgement’ is not properly defined within the regulations; second, the Local Government Finance Act 1988, according to the letter’s signatories, does not allow Whitehall to forbid appeals on the basis of accuracy.

The joint letter calls on the Government to withdraw the ‘reasonable professional judgement’ clause from the regulations.

‘At a point when hard-pressed businesses are keeping our economy moving, this change is not just morally but legally wrong,’ said Debbie Warwick, head of ratings at Daniel Watney LLP.

‘It’s the equivalent of making it illegal to challenge an incorrect income tax bill.

‘When we’re trying to attract investment into post-Brexit Britain, this sends totally the wrong message about transparency in our tax system.’

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