The Welsh Assembly has come under pressure to scrap the highly controversial staircase tax as it emerged that the Welsh Government was condoning continuing implementation of the Mazars decision.
In England, the Government has published draft regulations which the Office for Budget Responsibility says will save firms £200million over the next 5 years. Business rates in Wales are devolved.
It is understood that the Valuation Office Agency, an executive agency of HM Revenue & Customs tasked with setting property values which determine bills, has told firms in Wales that the draft regulations published by the UK Government, which would reverse the effects of the Staircase Tax, only apply to England. In Wales, according to the VOA, it was “business as usual” and they would have to carry on implementing the Mazars ruling until the issue was addressed by the Welsh Assembly.
Alex Probyn, President of UK business rates at real estate advisor Altus Group, said: “There is ambiguity within the draft regulations. The position in England is unequivocal and the Government is committed to returning firms to the tax position they were in before the court ruling. I would urge the Welsh Government to clarify their intent and follow suit or it would create a perverse and unfair situation for those firms in Wales who could potentially face backdated bills going back seven years.”
The so-called staircase tax resulted from a Supreme Court ruling in the Mazars case that required all separate units in a shared building to receive individual bills. Due to a number of well-established valuation principles, this had the effect of substantially increasing bills.
The Ministry of Housing, Communities and Local Government is consulting with experts until 23 February and, subject to Parliamentary approval of a draft bill, those businesses that have been directly impacted by the Supreme Court judgement will be able to ask the VOA to recalculate valuations based on previous practice. A business can then have its bill recalculated if it chooses, and backdated. This includes those firms that lost small business rate relief. The move to reverse the Mazars judgement was welcomed by the Treasury Select Committee.