Digitalising business rates could weaken local authority powers

This comes after Government launched a public consultation on DBR, setting out and seeking views on how it proposes to connect business rates and tax information.  

The Government committed to DBR in its conclusions to its business rates review in the Autumn Budget 2021. The proposed new system would link business rates information (held by local billing authorities) to tax records, which are held by HMRC. 

Furthermore, it would enable businesses to view a copy of business rates billing information for all their non-domestic properties in England in one place, alongside other tax information. 

Better policy?

The Government has said the new system would allow opportunities to better target business rates policy, including reliefs, in the future by have access to more comprehensive data.  

It would also permit more effective compliance and a better experience of the business rates and wider tax system for businesses, including the ability to better to understand and review their tax liabilities in one place. 

A Government spokesperson said DBR represents a major step towards modernisation of the system, which would tackle many of the concerns raised by stakeholders in previous consultations. 

Colliers Head of Business Rates John Webber added: “While there are some strong merits in the new proposals – in particular this might help central Government in the distribution of reliefs and grants – it does beggar the question about the long-term role of local authority finance."

Distributing power

He continued: “At present, every local authority sends out bills and collects business rates. The proposals would mean local authorities would be in effect sending out bills for central government or HMRC which would be taking a more controlling role in the whole process. Would this ultimately lead to business rates being part of HMRC’s overall tax assessment?” 

He also believed this could be the first step on the way to a system of self-assessment for business rates, which has long been floated. 

The work on the new scheme is being led by the DBR team in HMRC and welcomes views from ratepayers, their agents and representatives, billing authorities and any others who have an interest in the business rates or wider tax system.