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Business Rates

Volume 487: debated on Tuesday 10 February 2009

Today I am confirming the legislative steps we are taking to implement the Chancellor’s announcement in the pre-Budget report (PBR) that we would enable port occupiers, and any other businesses similarly affected by significant and unexpected backdated liability for business rates, to pay their backdated liability through staged payments over eight years and to relieve billing authorities of the duty to collect those liabilities in full in the current financial year. In addition to the PBR undertaking to allow the extended time to pay for previous years’ costs, we are enabling any backdated liability arising in the current year’s costs to be included in the scheduled payments.

To implement the schedule of payments policy in England, I am laying regulations before the House today, which are set to come into force on 9 March. The Welsh Assembly will be responsible for similar arrangements it intends in Wales.

The recent Valuation Office Agency’s (VOA) review of the rating of ports and the subsequent separate entry for the first time of 569 properties within ports on the ratings list has highlighted the impact of such backdated liabilities that can arise as a consequence of rating properties that are newly identified by the Valuation Office Agency.

This is an established feature of the way the business rating system operates in order to ensure that all rateable property pays its fair amount of rates, with all business properties being treated equally. In the year 2007-08, some 777 new assessments, caused by some “splitting” of existing properties, were added to the list. This resulted in a potential 33 months or more backdated liability. Some 1,666 such new assessments, including many of the ports occupiers following the VOA ports review, were added to the list up to 31 October 2008. However, in the current economic conditions the Government are concerned about the impact of a significant backdated rates liability on the trading prospects of businesses. The new schedule of payments will therefore apply to all ratepayers occupying properties that meet the criteria in the regulations. Based on historical trends the Government estimate that up to 1,500 properties could benefit from a schedule of payments in the coming financial year.

The VOA has also put in place fast track arrangements to deal with any port-based firms who want to question or challenge their assessment following the ports review. Although there have been some problems with businesses not providing the full information required in their appeal request, valuation officers are talking to the businesses concerned to ensure these issues can be resolved as rapidly as possible. To date, the VOA reports that 78 formal appeals had been received under the fast-track procedure and five are fully resolved. In the remaining cases the VOA has made initial responses and in most instances is in further discussion with the ratepayers. As part of the commitment to bring cases to an early conclusion, all ratepayers who made a proposal before the end of November 2008, including those who did so before the fast-track procedure was introduced, have been contacted to establish whether they require early reference of their appeal to the independent valuation tribunal.

Finally, while any payments between port occupiers and operators are contractual matters between the parties, I—along with the Under-Secretary of State for Transport, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), the Minister responsible for ports—will be meeting this month with the port operators to encourage further discussion between the two parties, as it must be in the interests of port operators to ensure their facilities are put to economic use and to work together with their tenants. Otherwise they may be faced with the prospect of empty premises, no fee income from tenants and an eventual liability for empty rates on that property.

To conclude, the Government understand that in the current economic climate, it could be harder for businesses that are faced with significant unexpected backdated rates bills to discharge their liabilities. Therefore to reduce the cash flow impact on businesses given the current economic difficulties, the Government will allow businesses faced with certain unexpected backdated rates bills up to eight years to pay the amounts due.

The Financial Secretary to the Treasury and I have today written to the Treasury Select Committee and Communities and Local Government Select Committee to update them with fuller details of the steps we are taking, and I am placing a copy of this letter in the Library of the House. I am today writing to the leaders of all billing authorities with ports in England confirming the legislation and the arrangements they should now offer to eligible firms in their area. Chief finance officers will receive a detailed business rates information letter with details of the changes. Departmental officials are also writing today directly to the occupiers of the properties affected by the ratings review of ports, to ensure they are aware of the availability of the schedule of payments.