Exclusive: George Osborne set to miss target to clear backlog of business rates appeals

Osborne’s pledge to clear backlog by next July in jeopardy

(Rex Features)

George Osborne is likely to miss his target for clearing the backlog of business rates appeals, according to figures seen by The Independent.

The Chancellor vowed in his Autumn Statement last December that 95 per cent of the 170,000 outstanding appeals, with firms disputing their tax bills, would be cleared by July 2015.

The Valuation Office Agency (VOA), which assesses business rates for every commercial property, has been referring thousands of appeals to the independent adjudicator, the Valuation Tribunal Service. The VOA has managed to resolve only 69 per cent of the appeals, and with many of the most complex cases still awaiting adjudication, experts said that Mr Osborne’s deadline is unlikely to be met.

News of the persistent backlog will put more pressure on Mr Osborne to overhaul the business rates regime in the Autumn Statement due on 3 December.

Nearly 79,000 property tax cases have been referred to the Valuation Tribunal Service since April and there are 21,000 cases listed with a hearing date. However, in the last four years only 14,000 cases have been heard.

“Many of the cases remaining are the more complex and contentious appeals and unless the VOA puts more effort in to considering these, rather than continuing to defend its valuations due to lack of time to negotiate, more cases will require determination by overstretched tribunals,” said Jerry Schurder, head of business rates at the property consultancy Gerald Eve.

The business rates expert Paul Turner-Mitchell, who uncovered the data using Freedom of Information requests, said: “The problem is there are still far too many businesses who don’t understand how the system works. It is in desperate need of reform and therein lies the major problem.”

He added that only one in three business rate payers found the way the values of properties were calculated easy to understand. Rates are based on the value of each commercial property and are set to bring in £27bn in this financial year.

A spokesman for the British Retail Consortium, which has led the charge for reform of business rates, said: “We’re talking about a system that only lurches forward because enough ratepayers appeal their valuation. That helps no one, including the Treasury.”

A spokesman for the VOA insisted that its target could be hit, but did not say how the tribunal service would increase its output. He said: “The VOA is on track to meet the Government’s target. As of the end of September, it had already cleared over 115,000 (almost 70 per cent) of the appeals in question and is clearing an average of 500 appeals a day – to suggest we are behind is wrong.”