Help for companies facing back-dated business rates

Local Government Minister John Healey today welcomed the Chancellor's announcement in yesterday's Pre Budget Report to give businesses more time to pay certain backdated business rates bills. In certain circumstances, businesses will not be required to pay rates liabilities for previous years within the current financial year, but will be able to do so in interest-free instalments over 8 years.

Mr Healey said that this legislation which, when implemented, will mean local authorities will not require an immediate payment and therefore remove the immediate tax liability from eligible businesses. It is estimated that ratepayers on up to 1,500 properties a year across England could benefit, including up to 500 plus occupiers of ports.

The Minister also reported that the Valuation Office Agency (VOA) has put in place special fast track arrangements for ratepayers with backdated bills who want to question or challenge their assessment. Under these arrangements, the VOA will give priority attention to such cases to ensure that affected businesses can expect a rapid response to their query, complete clarity on their rating liability, and an early resolution to any appeals.

Although this issue was brought to light by a review of rates in ports, the Chancellor's announcement will help other businesses which find they are facing a rates bill backdated over several years in similar circumstances.

This is a unique scheme for existing companies in special circumstances who are listed and liable for business rates for the first time with substantial backdating but already well into the rating list period. The package was worked up urgently by John Healey with Treasury Ministers, in recognition of the impact of the issue.

Ports Minister Jim Fitzpatrick will also continue to engage with port operators to discuss these arrangements and the valuation changes within ports.

John Healey said:

"It is right that businesses pay the tax that is due. But in the current economic climate we must do all we can to support business and safeguard jobs.

"This special package of measures will mean that businesses affected by these special circumstances, including those in Ports, are able to pay their tax arrears in a more affordable timetable."

Notes

1. The Department is working on amending the necessary legislation and it is intended that the changes to the collection and enforcement regulations will take effect before the end of the financial year.

2. The Government will legislate to give businesses more time to pay certain backdated business rates bills issued before 31 March 2010. Businesses facing such bills will be able to pay their liability for previous years in equal interest-free instalments over 8 years, rather than immediately.

3. Local Government Minister, John Healey has held meetings with port industry representatives, most recently on a visit to Hull on Friday 7 November, to listen and find ways that government can support port businesses at this time.

The Department will be shortly issuing a statement setting out the detail of the proposed amendments.

4. The review was undertaken to ensure that all individual business within and outside of ports are treated in the same way. The review process has not in itself produced a large increase in the levy from ports and their business occupants in England but the redistributive effect of it has had a severe impact in some areas/situations relative to others. For example, over 550 properties within English ports that were not previously assessed separately for rates are now receiving rates bills.

5. The non-domestic rate is a local tax and the revenue raised is distributed to local authorities to fund local authority services, such as public buildings, street lighting, fire brigades and policing. The tax is collected by local authorities, but the level of tax is set nationally and the proceeds are pooled centrally and redistributed to councils on the basis of a formula tailored to meet their needs.

6. Valuation officers are required to maintain accurate rating lists.  When they become aware a change is needed, such as at the ports, they must make the alteration and also specify the date from which the change should be effective for rates charging purposes.

The date of the change is governed by (legislative) regulations. Where the correction is to insert a property which existed on or before 1 April 2005 into the list, these require the alteration to be made from the start of the rating list, currently 1 April 2005. 

7. The Valuation Office Agency will also be expediting any appeal by a port occupier to their recent valuations. The Valuation Office Agency will be writing to all port occupiers to inform them of this process and the special arrangements introduced for backdating cases will include a five working day response to enquiries (ten days if a site visit is needed) with a the formal proposals being dealt with as quickly as possible, with an initial response within 10 working days. 

All Ratepayers who disagree with the rateable value of their property may appeal to the Valuation Office Agency. This is an established aspect of the non-domestic rating system. The Agency will consider all issues brought to their attention and endeavour to come to an agreement with the rate payer. Appeals are not limited to challenges against compiled rating list entries. Ratepayers may also appeal against alterations to rateable values made by valuation officers and on the grounds of a material change of circumstances.