Business leaders have slammed the Government over plans to ban companies from appealing business rates bills, with one retailer branding the proposal “undemocratic”. 

According to new research, the ‘reasonable professional judgement’ provision could cost small businesses in England £700m over the next five years, prompting a collective outcry from business groups. The proposed rule would ban business owners from appealing their rates bill if the error margin was 15% or less.

In the run up to the publication of the new rateable values, the Government said small businesses would be helped, but my rates will increase by up to 20%

Using official Valuation Office Agency data, property consultants Daniel Watney found that small businesses with a rateable value of between £12,000 and £15,000 could overpay by a total of £137m a year under the new rule. Over the full five-year cycle, overpayments could reach £689m.

Stores falling below the £12,000 rateable value could be denied their rates exemption under the proposed rule, meaning they could be charged up to £431m in overpayments over five years.

Kamal Thaker, owner of Stop Shop News in Edgware, Middlesex, said the rates system was already a problem for the industry.

“In the run up to the publication of the new rateable values, the Government said small businesses would be helped, but my rates will increase by up to 20%,” he said.

“I thought this Government was all about fair play,” he said. “What on earth made them think that they could get away with this?

“Are we in a democracy or a totalitarian regime?”

Debbie Warwick, head of rating at Daniel Watney said: “For most businesses, rates are the third largest expenditure and, for any ratepayer, an overpayment of 15% will impact profitability.”

Jerry Schurder, head of business rates at property consultancy firm Gerald Eve, said the proposals were “wildly unfair”.

“This would make hard-pressed businesses pay for the VOA’s mistakes,” said Schurder. “The Government needs to reform the VOA or the system, not penalise businesses by outlawing appeals.”