More than 133,000 businesses are still waiting for an appeal of their business rates valuation from 2010 to be resolved, council leaders have revealed.
The Local Government Association (LGA) said councils have been forced to divert £2.5bn away from stretched local services over the past five years to cover the risk of business rates appeals, as they have to fund half the cost of any backdated refunds.
Local councils do not set business rates or rule on challenges by businesses making appeals. But the result of appeals is that councils must set money aside by diverting funding from delivering the services that local taxpayers pay for and expect until appeals are decided.
Ahead of a Westminster Hall Debate on business rates, the LGA is calling on the government to take the financial risk from business rates appeals away from local government.
The LGA said government plans to allow councils to keep more of the business rates they collect, a move which has been long-called for by local government, makes it even more imperative for reform of the system to protect councils from the growing and costly risk of appeals.
Council leaders are also recommending a time limit for appeals, except in exceptional circumstances. In Scotland, there is a six month time limit for businesses to appeal their valuation.
Cllr John Fuller, vice chairman of the LGA’s resources board, said: “Ongoing delays in tackling business rate appeals from 2010 are heaping further financial uncertainty and pressure on our local services at a time when every penny counts to give councils the best chance of protecting services over the next few years.”
He added: “Despite not setting business rates or ruling on appeals, councils are having to take billions of pounds away from already stretched local services, such as adult social care, protecting children and supporting businesses and boosting local growth, to cover the financial risk and uncertainty arising from this backlog of appeals. This is completely unfair.”