// Parliament shut down leads to collapse of new law aimed at easing business rates pressure on the high street
// Legislation was for business rates bills to be reassessed every 5 years, rather than the current 5-year period
// The collapse of the legislation potentially wasted £50m of taxpayers funds in the process
Legislation aimed at easing pressure on retailers has been scrapped due to the government closing down Parliament – potentially wasting £50 million of taxpayers’ cash in the process.
The legislation was due to ensure business rates bills for all commercial premises would be reassessed every three years, rather than the current five-year period.
It also had the aim of bringing forward the next revaluation to 2021.
Campaigners who had pushed for the change to ensure bills are more accurate criticised the decision and urged the government to reintroduce the bill as soon as Parliament sits again next week.
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The Ministry of Housing, Communities and Local Government, which is responsible for business rates, said a new bill would be reintroduced “in due course” but would not confirm exactly when.
However, sources from the ministry speaking to the PA news agency said that while the government was still committed to a revaluation of business rates in 2021, things were now back to square one.
This is attributed to the fact that getting the bill through all the necessary stages in both the Commons and Lords would now be dependent upon parliamentary time.
The Valuation Office Agency (VOA) use rental data two years before imposing the new revaluations, but with Parliament suspended, the Non-Domestic Rating (Lists) Bill 2017-19 collapsed.
Government inspectors from the VOA have already spent around £50 million carrying out the revaluation process of non-domestic properties in England and Wales.
The inspectors had assumed the changes announced in the 2018 Spring Statement would pass into law this week.
However, unless a new law is brought before Parliament quickly, the VOA will have to do the inspections again – costing a further £50 million.
The cost was recently revealed by the VOA at a select committee hearing.
“Once again, government have allowed this small but crucial piece of legislation to fall by the wayside,” BRC property policy adviser Dominic Curran said.
“Retailers across the UK will continue to be overcharged on rates bills based on outdated valuations.
“This problem is compounded by Downwards Transition – a system that will see retailers overcharged £1.3 billion over a five-year period.
“As a consequence, retail makes up five per cent of the economy yet pays 10 per cent of all business taxes and 25 per cent of business rates.
The government must give ratepayers certainty by reintroducing and fast-tracking the Non-Domestic Rating (Lists) Bill in the next session and scrapping the broken system of Downwards Transition.”
Robert Hayton, head of UK business rates at the real estate adviser Altus Group, said that much of the retail sector would be “winners” under a 2021 revaluation with rents falling on many high streets.
“What businesses need with their tax affairs is certainty, accuracy and fairness,” he said.
He added: “Failing to reintroduce the bill, or not ensuring its swift passage through Parliament, adds uncertainty about when bills will change and to what level.
“Retailers, who are expecting their rates bills to fall in April 2021, will feel particularly let-down.”
Rates bills are calculated based on an estimate of the rental value of each property, but these are only calculated every five years and can lead to inflated taxes being paid – especially on the hardest-hit high streets that have seen rents fall but rates remain the same.
Following the 2021 revaluation, the next one was due to take place in 2024 and three years thereafter – as announced by former Chancellor Philip Hammond at the Spring Statement in 2018.
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