Business rates appeals to cost Government £4.2bn according to the DCLG

The Department for Communities and Local Government (DCLG) estimated the payments from 2010 to 2015 as a result of reductions in rateable values due to successful appeals, and of any interest payments arising from those repayments.

Business rates expert Paul Turner-Mitchell, who calculated the figure from a number of Freedom of Information requests said the figure comes about after one in three commercial properties in the UK contested the tax.

This year alone English councils are estimated to pay £578m back businesses following successful appeals.

Turner-Mitchell said: “So far, 35% of all business properties in England have appealed their business rates assessment. I project that to rise to nearly 40% based upon current levels by the end of March next year.”

The figures reflect how concerned retailers, in particular, are about the state of the business rates system, as they believe the property tax is a large burden to business, which is restricting investment and job creation and putting pressure on struggling high streets.

The British Property Federation (BPF) said the number of appeals is “indicative of how business rates are crippling small businesses”, according to the Telegraph.

Since the latest revaluation of business rates was enforced in 2010, there have been appeals on 590,850 of the 1.8m commercial properties in the UK eligible to pay business rates.

But the Government has delayed the next revaluation which was scheduled to take place in 2015, instead postponing to 2017. This has sparked fierce criticism from retailers who are paying business rates based on property valuations taken place before the recession and many businesses have appealed their rates bill to give them a more accurate tax.

BPF director of policy Ian Fletcher said: “The fact there are so many appeals is indicative of how business rates are crippling small businesses, and of their perceived unfairness. The most effective way to bring the number of appeals down would be to reform the system to relieve the pressure on those who are paying it.

“The BPF has urged the Government to pursue reform and would particularly like to see it commit to more frequent revaluations, preferably every one or two years rather than every five years, so that business rates are closer to economic reality.”

The DCLG estimates repayments to help calculate the amount it will charge businesses in rates each year.

Stephen Williams, the communities minister, said: “The Government has already capped the multiplier for 2014-15 at below inflation, as part of a broader £1bn package of tax cuts to business rates.

“At each rates revaluation, the Government is required by law to adjust the multiplier to reflect the cost of future appeals. The business rates revaluation process is designed to be revenue-neutral and not raise any extra money for the Exchequer.”