Consultation

The Budget sadly did not bring anything that we did not already know and it was a similar story insofar as the Fundamental Review of Business Rates with the detail of responses published on so called “Tax Day” - 23^rd of March. The AR Board are pressing for details of the next steps to consider further reform of business rates and a roadmap to address the issues raised by stakeholders. The AR Board along with professional bodies representatives and other trade bodies want to actively engage on much needed reforms and that engagement needs to commence soon for meaningful progress to be made in advance of an expected decision in the Autumn of 2021.

Two further items of interest. The first, the decision of the Government to introduce legislation to limit the ability of ratepayers and their agents to make proposals for material change of circumstance (MCCs) for the impact of Covid-19. The Statutory Instrument SI 2021/398 introduces secondary legislation to effectively extinguish Covid-19 MCC proposals and the Queen’s Speech also announced the intention to bring forward a bill the – Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill  to make provision about matters that can and cannot be taken into account when making determinations for the purposes of non-domestic rating and the valuation matters that can be considered. The Bill sets out proposals to give retrospective effect. The secondary legislation takes effect from 25^th March 2021 to give immediate effect to any new challenges under the Check, Challenge and Appeal system so as to limit the scope of proposals seeking to reflect the impact of NPI (Non-Pharmaceutical Intervention) measures. An announcement was also made of an additional £1.5bn Business Rates Relief fund for affected businesses outside the retail, hospitality and leisure sectors but is significantly lower than might have been seen should the business rate appeals have been successful. The process of administering and granting the relief will be discretionary and administered by Local Authorities and is likely to cause a “headache” for the Local Authorities as much as it does for ratepayers and agents.

Second a recent decision in the UK Supreme Court Hurstwood Properties (A) Ltd and others (Respondents) v Rossendale Borough Council and another (Appellants) [2021] UKSC 2019/0071 concerns whether a local authority has reasonable grounds for claiming non-domestic (business) rates from the respondent companies who were seeking to mitigate rate liability. This being a test case surrounding the issue of unpaid rates and whether the dissolution and liquidation schemes along with the use of SPVs (Special Purpose Vehicles) were shams or not coupled with consideration as to the approach to “piercing the corporate veil”. The Supreme Court unanimously allowed the local authorities’ appeal and suggested that there was a case to answer in so far the companies liability to pay business rates. Choosing how to mitigate and manage rate liability for surplus or unoccupied property has just become more complicated and costly as a result.