Exclusive: Failure to go Dutch on rates angers UK firms

A government report into the future of business rates has been called a sham, with critics arguing that ministers failed to take advice from businesses and representatives who gave written evidence.

Officials also failed to speak with Dutch counterparts, despite experts pointing out the similarities in the system in the Netherlands.

Most businesses want more regular revaluations of commercial properties, which form the basis for rates bills, from every five years to yearly. Instead, the Government extended the current period to seven years, despite revealing in an interim report on the subject last week that virtually no businesses wanted an extension.

In the Netherlands, the business rates revaluation period was changed from five years to yearly in 1997. The more accurate valuations have cut administration costs.

Ruud Kathmann, of the Netherlands Council for Real Estate Assessment, said of the reform: “By a more frequent revaluation the differences between the previous assessed value and the new one would become smaller and that is easier to explain. Therefore we also expected a lower number of appeals.

“Another reason for a more frequent revaluation was the fear for a change in the market with decreasing values. We were afraid that taxpayers would not accept to pay taxes based on an assessed value that is higher than the current market value for another three years.”

In the UK, high-street retailers in poorer regions – where values have fallen in the last five years – are subsidising richer areas where values have risen, because the business rates bill is based on out-of-date values. This has led to huge numbers of appeals, and The Independent recently revealed that the Government would miss its target to clear 95 per cent of the backlog by the summer.

A report by the British Property Federation has called on ministers to learn lessons from overseas. Paul Turner-Mitchell, who wrote the report, said: “Businesses are getting fed up with the Government constantly asking for their opinions on how to create a simpler system and then ignoring the advice.

“The system in the Netherlands looks like the perfect example to learn from, yet the authorities didn’t bother even making a phone call.”