Some of the UK’s biggest employers’ groups have united in condemning the government’s “outrageous” changes to business rates.
Thirteen trade bodies have written a joint letter calling for a clause that could prevent firms appealing against unfair rate rises to be dropped.
The group, including the CBI and British Retail Consortium, called the change “punitive”.
But a government spokesman said the “claims are simply false”.
Bodies that have signed the letter to ministers include the British Retail Consortium, Federation of Small Businesses, Revo, the Association of Convenience Stores, and the British Property Federation.
The next business rates revaluation comes into effect on 1 April – the first for seven years – but the lobby groups said that tens of thousands of firms still face uncertainty over bills.
It is claimed that the government plans to dismiss appeals against rises, even if firms can prove that their new rateable values are wrong.
What is the rates row about?
Business rates are effectively the commercial version of council tax, and are paid on the rental value of the space that businesses occupy. The amount depends of the size of the property and what it’s used for.
The last time properties were valued, in 2010, almost half of businesses appealed against how much they were due to pay.
The government wants to cut down on the number of these appeals.
The trade groups say the government wants the right to dismiss appeals against incorrect valuations that are deemed to be within the bounds of “reasonable professional judgement”, or margin of error.
This allowable margin of error has not been disclosed, but experts say it could be as much as 15%.
Helen Dickinson, director-general of the British Retail Consortium, told the BBC that the tax is “no longer fit for purpose in 21st century”.
She says that under new government rules, business owners will still able to appeal against a higher valuation.
However, a clause states that even if rates are found to be unfair after the appeals process, they can still stand if they lie “outside the bounds of reasonable judgment”. This somewhat vague wording is, she says, “what everyone is upset about”.
Jerry Schurder, head of business rates at property consultancy Gerald Eve and a supporter of the protest, said: “The government’s outrageous proposals, designed to legislate away its errors, are unprecedented in UK taxation and would force hard-pressed businesses to cough up an extra £1.9bn to pay for the Valuation Office Agency’s (VOA) mistakes.
“The government seemingly has no confidence in the VOA’s assessments, in which case it needs to reform the VOA or the rating system, not penalise firms by outlawing appeals,” he said.
Based on the outcome of successful appeals following the 2010 revaluation, the Gerald Eve consultancy calculated this could lead to firms overpaying by as much as £1.9bn over the next five years.
Gerald Eve’s Mr Schurder added: “Individuals would never tolerate overpaying their income tax when it could be proved an error had been made, and it is unacceptable that the government expects firms to pay up and shut up in this manner.
“The way that trade bodies from a wide spectrum of industries have been motivated to unite against this clause shows the strength of feeling against what is a punitive and deeply unfair proposal,” Mr Schurder said.
But the government issued a strong rejection of the claims.
A spokesman said: “These claims are simply false. We are not preventing anyone from appealing their bills, or setting any margin of error for appeals being heard.
“We’re reforming the appeals process to make it easier for businesses to check, challenge and appeal their bills, while at the same time generous business rate reliefs mean thousands more businesses are seeing a reduction.”
He added that, once the changes come in to effect, 600,000 businesses will pay not rates at all.