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Significant changes ahead for business rates

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Published: 21 Mar 2023 Update History

ICAEW’s Tax Faculty explains the technical changes to the business rates system announced alongside the Spring Budget.

Following a consultation, technical changes are being introduced to allow for several significant changes to be made to the business rates system.

Ratepayers will need to notify the Valuation Office Agency (VOA) within 60 calendar days of any changes to occupier and property characteristics that affect their assessment of liability for business rates to allow for more frequent property valuation. This includes when their rent changes, they start or stop occupying a property, or they alter a property. This obligation is planned to be introduced during the 2023 lists.

The applicable penalty regime has been redesigned to give businesses sufficient opportunities to comply before financial penalties arise. Where requirements arise under the VOA and digitalising business rates system (referred to below) under the same customer journey, a ratepayer will not be penalised twice, even if they fail to comply with both requirements.

Ratepayers must also submit an annual confirmation that they have provided all the information required of them. They must make this confirmation within 60 days after 30 April (the end of each assessable year). The government will not introduce this annual confirmation process until it has ensured it will be sufficiently straightforward for ratepayers to complete.

Digitising business rates

HMRC undertook a consultation during the summer of 2022 on ‘digitising business rates’. The project aims to match up the details of businesses held by HMRC and local billing authorities. This would potentially allow HMRC to target future business rates relief more effectively and for both authorities to spot when tax or business rates avoidance is being carried out more easily.

Following the consultation, HMRC has decided that additional information required from ratepayers to allow this matching will be captured as part of the VOA requirement, referred to above.

This will create a new obligation for ratepayers to provide tax or other reference numbers, with an accompanying sanctions regime for non-compliance. However, the government will design the sanctions regime in a manner which, in the first instance, encourages and supports ratepayers to satisfy their digital business rates obligations.

HMRC has decided that this project will not immediately include a portal through which businesses can view all their tax and business rates information in one place. This could become a feature in the future, however.

Spring Budget 2023

On 15 March 2023, Chancellor Jeremy Hunt delivered the Spring Budget. Read ICAEW's analysis and reaction.

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