HMT Publishes Interim Findings into Business Rates Review
“Longer Term Vision” will follow in the autumn. No viable alternatives to rating.
The Government has published its long awaited interim report following its Fundamental Review and call last summer for evidence from stakeholders.
The report lacks any suggestions for actions to reform business rates. Instead, it documents the common themes where stakeholders believe change is required. It also comes as no surprise that the final report into the review is due in the autumn, as this ties in with when the G7 is considering taxation from a global perspective, including a Digital Services Tax (DST), which the Chancellor of the Exchequer announced last year in fledgling form.
Issues identified by the report are the long established complaints against the business rates system, including: infrequency of revaluations; overly complicated reliefs; supplements and transitional systems; a rate in the £ of 50p (a tax rate of over 50%) and the over complicated and unwieldy Check Challenge Appeal process.
Reassuringly, the report confirmed £53m funding of the Valuation Office Agency - whose resource and customer service issues are well documented - and many stakeholders, including BNPPRE, have called for ‘green plant’ to be derated.
Of note is that stakeholders were mostly of the opinion that possible ‘new’ taxes would not be viable alternatives to business rates, which the report points out is a significant and stable revenue raiser that is hard to evade. Alternative taxes would be disruptive to implement.
On the popular suggestion of an Online Sales Tax (OST) it is reported that the majority of stakeholders appreciate that this would not be an alternative to business rates, although instead it could supplement business rates revenue. Some suggested an OST would be a tax on innovation that would be passed on to consumers. In view of the early manoeuvres towards a DST as a new, additional tax, one can only wonder if the alternatives mentioned in the report are moot…
The indications are business rates are here to stay, although one will have to wait until the autumn for the Government’s vision of what the system will look like at Revaluation 2023 and beyond. But for now, the Government has confirmed it wants businesses’ rates liabilities to reflect COVID-19.