The Local Government Association (LGA) has called for urgent reform of the business rates appeals system, claiming that money set aside to cover the risk of appeals could be better used for local services.
The calls follow the confirmation in the Queens speech that local authorities will be able to retain 100 per cent of business rates.
The LGA welcomes this move but says that councils have been forced to divert at least £1.75 billion over the past three years to cover the risk of appeals and backdated refunds.
Almost 900,000 businesses have challenged their business rates bill since 2010, and the LGA has cautioned that local government could be liable for 100 per cent of refunds by 2020.
As a result, the LGA is calling for the system to be reformed to enable local government to better utilise money to support local services instead of diverting funds for business rates appeals.
Cllr Claire Kober, resources portfolio holder at the LGA, said: "The sheer scale of appeals suggests that too many businesses are not happy with what they are being charged or are simply taking advantage of the fact that it is too easy to appeal, meaning they think they have nothing to lose. By 2020 local government could be liable for 100 per cent of refunds. As every penny will count in giving councils the best chance of protecting services over the next few years, we also need urgent reform of the appeals system so councils can use the money set aside to cover the risk of these appeals to invest in vital local services."
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