WIREDGOV

The business rates appeals system should be reformed to help protect vital local services supporting communities and businesses, local government leaders urge today.

As part of its submission to the Government's review of business rates, the Local Government Association, which represents more than 370 councils in England and Wales, is calling for urgent reform of the appeals system.

There have been a large number of cases received by the Valuation Office Agency after the Government set a deadline of April 1 this year for appeals relating to the 2010 valuation to be submitted and able to be backdated. 

They include an appeal by telecommunications giant Virgin Media to merge business rate payments for its broadband fibre optic network to 68 councils across the country. 

If successful, the company would pay one single rate and councils affected would have to refund five years' worth of rates - totalling around £75 million - and suffer significant future losses in business rates income. 

This would damage their ability to pay for vital public services such as caring for the elderly, fixing roads and collecting bins.

The LGA wants councils named as interested parties on appeals in order to give them the chance to defend their income and protect communities from potentially damaging claims. Appellants should also be forced to give much clearer reasons for their appeal.

The LGA's submission also calls for councils to be devolved the power to set business rates in their local area based on a reformed property tax and retain 100 per cent of all business rates income.

Currently, government sets the business rates charge and keeps half of business rate income and growth – extra income earned from new business premises – which it redistributes to local authorities in grants

There are nearly 1.8 million properties liable for business rates in England. With greater local control, councils could ensure rate reduction and discount schemes – already up and running in some areas – could benefit thousands more business nationwide. 

A recent survey by the LGA found more than two-thirds (68 per cent) of UK businesses agree that councils should be able to set business rates locally.

Cllr Claire Kober, Chair of the LGA's Resources Board, said: 

"We need a business rates system which is buoyant, responds to local needs, promotes growth and is fit for the 21st Century. 

"The financial risk facing local authorities due to business rates appeals remains one of the biggest weaknesses of the current system and has the potential to damage councils' ability to improve people's quality of life, support local businesses and drive local growth.

"The Government has promised to reform the appeals system in its Enterprise Bill and we look forward to seeing the details.

"Business rates account for almost a fifth of local government income and raised around £23 billion in 2012/13 to fund local services. Councils must be able to contribute to the appeals process. This would not only enhance its accuracy but would help discourage speculative appeals like the one we have seen from Virgin Media.

"Councils and businesses both agree that business rates should be a local tax set by local areas which boosts growth and ensures local economies and businesses thrive. 

"Councils could do so much more to support small businesses if we were given the freedom and finance to set rates and discounts locally. If all business rates income was retained by local government we could also invest in infrastructure and vital public services.

"The pilots seeing Greater Manchester, Cheshire East, Cambridgeshire and Peterborough keeping a greater share of business rates income has been a step forward. This should not be limited to a handful of areas and all parts of the country must be able to reap the benefits of a thriving local economy."