Ministers have ruled out the possibility of councils having the power to challenge business rate decisions following calls from councils for an “urgent review” of the appeals system.
Proposed new powers for local authorities would add “bureaucracy and delays” to the appeals system, according to the Department for Communities & Local Government, which said ministers were looking at other ways to improve the process.
DCLG’s verdict comes after a number of councils expressed concern about delays and councils inability to influence and manage the financial risks involved in the appeals system which is overseen by the Valuations Office Agency, which sets business rate levels.
Local authorities have previously had little to do with the body as business rate income and appeals liability was previously solely the Treasury’s concern. However, councils will retain 50% of business rate growth from April and will also be responsible for 50% of costs when appeals are successful.
In January this year, Brighton & Hove City Council suggested councils should be able to appeal VOA ratings decisions arguing “it seems highly implausible that the Valuation Office almost exclusively only makes over-estimation errors”.
However, a spokeswoman for DCLG said Brighton’s proposal was unlikely to reduce appeals times.
“Such a right would allow local authorities to opt into appeals being discussed between the valuation officer and ratepayers and prevent those appeals being resolved without their consent,” she said. “This would introduce new bureaucracy and delays into the system and it would not support our objective from rates retention of delivering growth.”
She added: “We are aware of concerns about the backlog of rating appeals and we are working with the VOA to find a way forward.”
Brighton is one of a number of councils who have expressed concern about the business rate appeals process and its submission to DCLG said “the whole appeals process is in need of urgent review with major concerns about the long delays in resolving appeals and the one-sided nature of the process with the over-whelming majority of appeals resulting in either no change or a reduction in rateable value.
“With councils taking 50% of the risks of the successful appeals but having no influence whatsoever on the outcome consideration needs to be given about how councils could mitigate this risk.”
Manchester City Council treasurer Richard Paver said many authorities had raised concerns “not least the time period over which appeals can come in and speed – or lack of it – for resolving some of them”.
However, he suggested a right for councils to be involved in appeals “would appear to be a considerable resource commitment”.
As previously reported by LGC, some councils did not attempt any assessment of appeals liability after deciding they “can’t spend a lot of time and resource we don’t have gathering that information” and there was a wide variation in estimates of those who did.
In preparation for business rate retention the VOA created a dedicated team of local authority relationship managers in November and is currently developing statistical data for councils for future release.
However, one metropolitan council treasurer who did not want to be named said their dealings with local VOA contacts “was not brilliant” and said councils felt kept at a distance from appeals decisions which now impacted them financially.
“It is a bit of a frustration because we are not very close to it and we’d like to be closer. We don’t feel particularly empowered in this process.”
A spokeswoman for the VOA said it had “an evolving partnership” with local government and was “happy to proactively engage”.
Councils could already help improve the quality of ratings in their area, she added. “We will also be seeking to build on existing working relationships which allow local authorities to provide information to valuation officers to improve the accuracy of the rating list in their areas.
“This will include the use of completion notices, provision and improvement of electronic reporting and occupier lists so we may request additional information.”