LGA calls for self-assessed business rates

Businesses should have the right to self assess business rates, which would give councils greater financial certainty once the tax is devolved, according to the Local Government Association (LGA).

The LGA claims that plans to allow councils to retain 100 per cent of business rates require further reforms to ensure councils are protected from the risk of business rate appeals.

The proposed self-assessed business rates would work in a similar way to other self-assessment taxes such as VAT and corporation tax. Under these proposed plans, businesses would submit their own assessment of rateable value ahead of 2017, and then be given a three-month window to appeal the final valuation, as opposed to the current system with no time limit.

The LGA believe this system would offer councils more protection from costly appeals and refunds, which have cost councils £1.75 billion over the past five years, with over 900,000 businesses challenging rates since 2010 and 330,000 appeals yet to be decided.

Claire Kober, LGA Resources Portfolio Holder, said: "It is clear that no-one is happy with the way business rates are being calculated. The sheer scale of appeals means businesses are fed up with being issued a bill with no input into how much they pay.

"Councils currently have to fund half of all business rates refunds and are already putting billions aside to cover the financial risk and uncertainty arising from the huge volume of appeals. This means vital resources being diverted away from stretched local services, such as caring for the elderly, supporting businesses and boosting local growth.

"By 2020, local government will retain all of its business rates income which will be provide a vital boost to high streets and investment in infrastructure and public services. However, it will also mean councils will be liable for 100 per cent of refunds. This makes reform of the appeals system even more urgent to protect councils from the growing and costly risk of appeals and ensure businesses are happy with what they pay.

"Councils will face £10 billion in cost pressures by the end of the decade, even before the possibility of any further funding reductions in the Spending Review. 

"Every penny will count to give councils the best chance of protecting services over the next few years. Our self-assessment business rates proposals would free them to use the money put aside to cover the risk of appeals to fund vital services and help plug growing funding gaps."

Read more