Labour blasted over 'shambolic' business rates system as firms flock to get revaluations

Labour has been accused of running a ‘shambolic business rates system’ after officials ‘rolled over’ and cut bills in a quarter of cases where firms simply registered for a check of their revaluation, while others faced delays in assessments that may be endangering their operations.

April’s three-yearly revaluation led to a big rise in bills for some firms, adding to the pressure of minimum wage and national insurance rises.

Hospitality has been among sectors hit hardest, leading to the closure of pubs and restaurants.

A rate cut was given to 6,000 of the 24,880 businesses that sought a check of their revaluation between April and September and whose cases were resolved.

Separately 5,240 cases have progressed to a formal challenge, only 290 of which have been resolved. 

Of those, nearly two-thirds, or 62 per cent, had their rates reduced. Shadow Chancellor Andrew Griffith said: ‘This shows the shambolic business rates system is already in chaos.’

In total, 37,000 businesses in England and Wales have registered for checks of this year’s revaluation, with 11,000 yet to be dealt with. 

Dire: Labour has been accused of running a ‘shambolic business rates system’

Officials aim to ‘complete all reviews within the statutory deadline of 18 months’. But Griffith said: ‘Eighteen-month waits and the backlog show they haven’t got a grip when Labour has raised rates, hurting the high street and jobs alike. 

For many, these delays will be the final straw.’ Mike Warburton, a retired tax director with accountant Grant Thornton, said the levels of reductions being agreed to are almost a tacit ‘admission of overcharging’, adding: ‘It shows it is worth challenging. 

'We’ve got restaurants and pubs, which are often at the centre of communities, closing thanks to factors like National Insurance and minimum wage rises. You get to a stage where you just can’t make a profit.’

Tina McKenzie, national chair of the Federation of Small Businesses, said: ‘The fact that nearly two-thirds of completed challenges were successful in lowering bills suggests many firms had legitimate concerns. It’s a warning sign to ministers.’

The figures also show how businesses unhappy after challenging their 2023 rateable values and went to an appeal finally had them cut in 53 per cent of cases.

HMRC said most outstanding 2023 valuation challenges were submitted in the past 12 to 18 months as they had until March 31 this year. 

It is responsible for valuing 2.14 million business premises and said it did ‘everything it can to ensure all valuations are accurate’.

The Government said: ‘HMRC uses robust evidence and established industry methods to ensure rateable values are accurate, with the vast majority of checks resulting in no change.’ 

It said the Budget cut rates by 20 per cent for pubs, clubs and music venues, axing them for premises with a rateable value below £18,000.

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