Government accused of using business rates to make £3bn tax "grab"

 
Helen Cahill
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Business rates are required by law to be revenue-neutral for the Treasury (Source: Getty)

The government has been accused of using the business rates system to "grab" £3bn worth of taxes from small businesses.

Business rates have been re-evaluated for the first time in seven years and the Treasury is billing businesses to cover the cost of appeals made against the new ratings. Normally, the government estimates that around four per cent of the total business rates collected will be paid back.

Read more: Rising business rates cast shadow over newly-opened flower market

However, according to analysis by business rates experts Gerald Eve, the government has increased its estimate to six per cent for 2017/18, meaning it will make £600m more every year from the pre-emptive charge. This amounts to £3bn over the next five years.

Jerry Schurder, head of business rates at Gerald Eve, said the government appears "willing to exploit the nation's ratepayers" by using "hidden calculations and small print that firms would never even notice".

Read more: Delay risk for plan to retain business rates

He added: "Business rates are an extremely complex and opaque tax and there is inadequate transparency for ratepayers. The substantial tax burden is particularly damaging to business' trust in the government, and firms will want assurances that the calculations are fair and there is no tax grab."

A government spokesperson told the Telegraph that the claims from Gerald Eve were "misleading".

"The business rates revaluation is revenue neutral and helps make sure bills are fair and accurate," the spokesperson said. "We're required by law to set aside funding for businesses who successfully challenge their bills, which ensures that councils do not face a funding shortfall."

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