The Government has announced a package of Business Rates Relief to be distributed by Local Authorities.
Key points from the announcement are as follows:
- New Business Rates relief fund of £1.5 billion for businesses affected by COVID-19 outside the retail, hospitality, and leisure sectors.
- Targeted support delivered as appeals against rates bills on basis of material changes of circumstance due to the pandemic to be ruled out.
- The relief fund will get cash to affected businesses in the most proportionate and equitable way.
- The £1.5 billion pot will be distributed according to official data on the impacts of the pandemic on different sectors, ensuring an even and more proportionate allocation of support across England based on the economic impacts of COVID-19 and not on estimates of the impact on a property’s value.
- We’ll work with and support local government to enable ratepayers to apply as soon as possible this year, once the legislation relating to MCC provisions has passed and local authorities have set up local relief schemes.
Unfortunately, whilst the headline sounds positive, business rates experts at Colliers are disappointed with this news.
The Government is going to legislate that MCC appeals for COVID-19 are not valid and therefore, as an example, businesses who have already received retail, hospitality and leisure relief will not be able to claim further.
In addition, the necessity to be able to demonstrate that a business has suffered an economic impact as a result of COVID-19 will mean that large groups of occupiers will miss out on the relief. Giving the Local Authorities the ability to decide who will be eligible for the relief is not prescriptive enough and we know from past experiences that Authorities all have different interpretations of the regulations. We also believe that this will be liable for the new UK-wide subsidy control.
John Webber, Head of Business Rates at Colliers went even further and said, “This is a staggering response by the Government to sectors that have been adversely impacted by COVID-19 that would not be out of place in a Banana Republic.
The Government is ripping out the rule book retrospectively. It is the wrong thing to do on every level.
The Government’s Valuation Office Agency (VOA) spent the last part of last year negotiating with the agents of rate payers on the impact of Covid-19 and its effects on businesses, following the government’s working from home and social distancing policies and agreed these constituted a MCC “Material Change of Circumstance” by which businesses would be able to claim a rebate on their rates bills.
To now deny this is a MCC retrospectively, because the numbers are too high is deeply shocking.
£1.5 billion will not even scratch the surface for businesses struggling to pay their rates bills from last year- over 400,000 of which have started the appeals process in what is “the largest MCC caused by a single event in rating history”.
“After three months of refusing to negotiate with us, to introduce retrospective legislation 12 months after rate payers first presumed they would see some hope of reduction and to change the rules like this makes a mockery of the whole appeals process and indeed the business rates system.”
“It’s unprecedented and deeply concerning not only for our clients, but all struggling businesses in the UK.”