HM Treasury is to introduce retrospective legislation that effectively rules out business rate appeals based on material change in circumstances (MCC) due to the pandemic. It said it would provide more targeted support than the business rate appeals system, and announced a new rate relief fund of £1.5 billion for UK businesses affected by Covid19. This will target office-based businesses and sectors outside non-essential retail, where there is a moratorium on business rates.
The Chancellor said that many of those businesses ineligible for reliefs have been appealing for discounts on their rate bills, arguing the pandemic represented an MCC. The government said that market-wide economic changes to property values, such as from Covid19 can only be properly considered at general rates revaluation, and it will therefore be legislating to rule out Covid19 related MCC appeals.
Instead a £1.5 billion pot will be distributed according to which sectors have suffered most economically, rather than on the basis of falls in property values. The devolved administrations will receive an additional £285 million through the Barnett formula, with £90 million being provided to the Welsh Government.
Business Rates Director at Cooke & Arkwright, Andrew West said, “As we reported on Wednesday, the Valuation Office Agency had been in talks with the Rating Surveyors Association (RDA) after a record number of appeals were lodged from businesses not covered by the existing Covid related business rate relief. The VOA halted the talks abruptly in December and there had been no further explanation until now.
“We now know that those appeals, which were mostly based on the adverse impact to property values caused during the pandemic will effectively be void, with the new fund intended to provide some compensation to these affected businesses.
“The RSA has estimated that £5 billion is at stake – money that would safeguard jobs in many sectors that have fallen through the cracks in terms of not receiving sufficient Government support. In this context the £1.5 billion fund will fall far short of the true economic impact on businesses.
“We await to hear from the Welsh Government about how it intends to distribute its £90m allocation.”
Read the Government statement here.