Opinion Former Article

Chartered Institute of Taxation welcomes review of Business Rates but calls for continued focus on clarity and certainty for taxpayers


The Chartered Institute of Taxation (CIOT) has welcomed the fundamental review of business rates and the extension of reliefs to support business in the face of COVID-19 but called for continued focus on the need for clarity and certainty for those businesses who will be continuing to pay rates through the crisis.

Kersten Muller of the CIOT’s Business Rates Working Group said

“The case for a fundamental review of business rates is overwhelming. We welcome the intention to issue a call for evidence and urge HM Treasury to consult widely to gain the greatest possible understanding of the complex and interlocking issues.

“It is important that this review addresses issues of clarity and certainty around business rates.

“Transparency around the criteria for business rates reliefs and the processes for claiming them matters to business -  and to local authorities - that both collect business rates and are reliant upon them to fund local services.

“In their recent report, the Treasury Committee pointed out that all 361 billing authorities have the autonomy to run their business rates system as they see fit. There is no obligation for billing authorities to be consistent in whether reliefs are applied automatically or not. Businesses find it difficult to know what reliefs they are eligible for, and local authority guidance on reliefs can be limited. How a relief is claimed varies too – some authorities offering an online facility while others use paper forms, the forms themselves differ between authorities.

“The government’s recognition of these challenges and the commitment to publishing a guide to business rates reliefs in England is a positive step forward. But more broadly the intended review needs to encompass all the reliefs and their efficacy, and should focus on a system that reflects the way businesses use property in the 21st century. Continual tinkering with the system does not create the best results.”

Notes for editors

1.HM Treasury will conduct a fundamental review of business rates See https://www.gov.uk/government/publications/business-rates-review-terms-of-reference/hm-treasury-fundamental-review-of-business-rates-terms-of-reference

The review will publish a call for evidence in spring 2020, and will report by autumn 2020.

2.In response to COVID-19, the government announced a number of business rates relief measures including an increase and expansion of the retail discount and an increase in the T business rates pubs discount to £5,000. Local authorities will be compensated for the loss of income as a result of these announced business rates measures.

3. Various other reliefs, both mandatory and discretionary, are available from full business rates liability. The announced review will include the effectiveness and operation of different reliefs.

4. The Government responded to the Treasury Committee inquiry into the impact of business rates on business: https://www.gov.uk/government/publications/government-response-to-treasury-committee-business-rates-inquiry.

5. A land value tax on non-residential property is often proposed by supporters as an alternative to business rates to address the distortions of the current system such as the disincentive to expand or equip premises.  There are fundamental differences between the two that will require evaluation as part of the wider review including a shift in liability from occupiers to landowners - although as the Treasury Committee recognises, who bears the legal liability and who the final economic cost is not necessarily clear; the scope and extent of exemptions;  and valuing and using the land component of the property as the basis of charge.

6. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk.

Out of hours contact George Crozier 07740 477374 gcrozier@ciot.org.uk

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