Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Supplementary memorandum by the British Retail Consortium and the CBI (LGB 39(a))

  Because of the necessarily reduced time we had to discuss the issues raised in the draft Bill, we thought it might be useful if we set out our views on an issue which we were unfortunately unable to cover: Business Rate claw-back on appeals. While this may appear to be a largely technical issue, it actually has fundamental significance for businesses and would have a major impact on their ability to plan for the future with confidence.

  The business community believes that the Government should make every effort to estimate losses on appeals accurately and that there should be no scope for clawing back the money later. We advocate this for two separate reasons: First, it gives the Government an incentive to make the estimates for losses on appeal as accurate as possible. Secondly, it continues to guarantee that extremely valuable stability on Business Rate bills between revaluations.

  The prime attraction of the current RPI-capped UBR is that it allows businesses to plan for the future with confidence. Allowing the Government to claw-back losses on appeal would effectively remove the RPI-cap and completely undermine this essential attribute of the UBR.

  Denying the Government this power would give them a powerful incentive to improve the accuracy of their estimates. The rate poundage is not adjusted for other changes in the yield, for example for extra revenue from new properties coming on stream.

  We therefore strongly recommend that claw-back powers should not be included. However, if the Government decides to the contrary, the least damaging way of introducing a claw-back facility should take account of other factors and take effect at the following revaluation when the NNDR rate poundage needs to be re-set in any case. In this way, the Government would not lose any revenue, but businesses would be offered the stability they need.

  We hope that these views can be taken into account by the Committee, so that this area of considerable concern to business can be addressed more appropriately in legislation.

Michael Roberts

Business Environment Director—CBI

Andrew Smith

Executive—Property and Regeneration—BRC

12 July 2002

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