Businesses across the countryside are facing a hike in their tax bills as a result of a flawed rates system that is in urgent need of review.
The CLA has set out an action plan for Treasury Ministers to avert the impending business rates crisis.
CLA President Ross Murray said: “Rural businesses are suffering because of a clumsy and unfair rates system. From this April, thousands of businesses will see dramatic increases in their rates bill, a problem exacerbated by the political decision to delay revaluation by two years.
“Ministers appear to have a tin ear to this problem and it is not good enough. That is why we are setting out an action plan that Ministers could adopt as soon as this Budget on 8 March going some way to defuse a looming rural economic crisis.”
In a letter to Treasury Chief Secretary David Gauke the CLA has set out five decisions the Government could make immediately. This would reduce the burden on businesses, and prevent the damaging situation that many are facing now from ever happening again.
1. Remove the cliff edge – some of the businesses worst affected by the 2017 revaluation are those whose rateable value has moved from below the 100% rateable relief threshold, to a rateable value above the new threshold. This is a dramatic change in business costs that could threaten their viability. To prevent this, businesses that were exempt under the 2016 Small Business Rate Relief should remain exempt under the 2017 scheme even if their new value has taken them over the threshold.
2. Remove the ban on businesses with multiple properties qualifying for Small Business Rates Relief – Ministers can end the arbitrary discrimination felt by many small rural businesses that are excluded from qualification for 100% rate relief simply because their business includes more than one property.
3. Remove the requirement to pay for appeals for worst affected – Ministers should remove the requirement to pay for an appeal from equine businesses, livestock markets, self catering accommodation, golf courses and events locations and any other business whose rates rise is a result of a ‘scheme” valuation rather than where the Valuation Office Agency has undertaken an individual valuation.
4. Remove rates liability for empty buildings in rural areas – where properties are unoccupied the property owner is required to pay the rates bill. The grace period is short - only three months for commercial buildings and six months for industrial. This significant cost, at a time when the property is creating no revenue, severely harms the ability to make necessary investments. Grace periods in rural areas should be extended to a minimum of two years to reflect the slower uptake of new property in rural areas.
5. Deliver right first time valuations in rural areas – review the approach to valuation of property, especially in rural areas, to ensure valuations are accurate based on local circumstances and not based on regionally estimated benchmarks.