Tribunal showdown over estimated £3.5bn pandemic business rates rebates

Businesses facing hefty business rates bills are set for a court showdown over the Government’s decision to strip them of their right to appeal their property taxes in a series of major cases this week.

The Valuation Tribunal, an independent judicial body, will hear a series of 26 test cases on May 18 from occupiers of non-domestic properties across the country over changes to the business rates system.

Around 170,000 businesses in England, across all sectors of the economy, sought to argue over the past year that the heavy impact of the pandemic on their operations means that their rateable value, which the property tax is based on, should be reduced.

The Government initially allowed more than 55,000 of these businesses to proceed to make a formal challenge with the Valuation Office Agency, an executive agency of HM Customs & Revenue.

This would have allowed firms to negotiate “in good faith” on potential reductions, amid an acceptance that working from home and social distancing measures were bona fide grounds to claim a rebate.

Real estate experts have estimated that these rebates could have been worth around £3.5 billion to UK businesses.

But as these negotiations were nearing a conclusion in March last year, the Government announced that it would retrospectively legislate to try and stop these reductions.

The Chancellor Rishi Sunak said at the time it “could have led to significant amounts of taxpayer support” for businesses adversely affected, arguing that Covid-19 and the response to it was not an appropriate use of “material change in circumstances” tax rules.

Robert Hayton, UK president of Altus Group, the firm representing ratepayers before the tribunal, said “businesses were led down the garden path”.

He added: “Our clients expect us to hold the Government to account for their actions, which we believe are not only morally wrong but also wrong in law.”