In a response to the recent consultation on business rates reform, ICAEW said the government should be more ambitious in its reform of business rates, including making changes to encourage improvements and to bring vacant properties back into use.

ICAEW said the maximum period for empty property relief should be extended from three months to at least nine months, to allow time for properties to be advertised and refitted for new tenants. It suggested that a requirement for meaningful commercial activity during ‘reset periods’ could be introduced to avoid abuse of the relief, while rate breaks could be used to attract new businesses.

The Institute added that improvement relief – which is given on qualifying improvements to a property, such as new features – should be enhanced. For example, new qualifying items of plant could be exempt, with greater publicity to make tenants aware of the relief, in a move which would encourage investment.

Additionally, ICAEW suggested the government consider exempting businesses from additional rates liabilities if they took on an additional property below a specific value; or provide a temporary break for relocating businesses to stop them from paying rates on two properties.

Valuations should be delegated to local or regional authorities, who have more knowledge of local conditions, as in the Dutch WOZ system. In the Netherlands all valuations are also published online, giving more transparency for businesses.

ICAEW said that the government’s corporation tax roadmap should be extended to cover all business taxes to give the government a more holistic view of the whole range of taxes and rates that businesses pay or administer, as incentives in one area can be counteracted by additional liabilities in another.

The Institute also called for a simplified system, with multipliers and transitional reliefs set in advance and in place for a number of years. It added that the government should be more ambitious for digitisation of the business rates system and should learn from the experience of devolved administrations across the UK.

Meanwhile, if the government was considering more fundamental reform of business rates, it might choose to look beyond the current valuations system, which can be costly, slow and complex, opting instead to design a system that is certain, simple, easy to use and properly targeted.

Richard Jones, Senior Technical Manager, Tax Policy, said:

“Reforms to business rates could incentivise investment, improve fairness, boost our ailing high streets and, most importantly, deliver growth to the economy, so we’re calling on the government to be more ambitious with their plans.

“We think that extending empty property relief from three months to at least nine months will give more incentive to landlords to refit empty properties, and we would like to see improvement relief enhanced to encourage investment.

“We’d encourage the government to extend the corporation tax roadmap to include business taxes, to provide a more holistic view of the taxes and rates that companies pay, and we urge the government to design a system that has certainty, is properly targeted, simple and easy to use.”

ENDS

Notes to editors:

1. ICAEW’s business rates representation.