The Welsh Government has come under pressure to scrap the staircase tax as it continues to allow implementation of the Supreme Court decision in the Mazars case.
Real estate advisor, Altus Group, welcomed publication of a bill on 28th March to overturn the Mazars decision by reforming rating of contiguous properties in common occupation, but regretted both the lack of a mechanism for backdated appeals and the failure of the Welsh Government to state its position with regard to the proposed new legislation, which currently applies only to England.
The Office for Budget Responsibility has estimated that reversing the Mazars decision will save firms £200 million over the next 5 years, but business rates in Wales are devolved and it is understood by Altus Group that the Valuation Office Agency will carry on implementing the Mazars ruling until the issue is addressed by the Welsh Government.
Alex Probyn, president of UK business rates at real estate advisor Altus Group, said: “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 requires all separate units in a shared building to receive individual business rates bills. Due to a number of well-established valuation principles, this has the effect of substantially increasing bills.
Subject to Parliamentary approval of the 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 mechanism for having bills recalculated remains unclear, since appeals against the 2010 rating list are now closed.