HM Revenue & Customs has been forced to second a team of experts to the Government department responsible for business rates as civil servants battle to improve the appeals system.

Around 25 people are understood to have been moved from HMRC to the Valuation Office Agency (VOA) on a temporary basis to work on a fix for the newly implemented “Check, Challenge, Appeal” process, which has been beset by problems.

The system, which was launched last year, was intended to make it easier for businesses to query the amount they were paying in rates, which are set depending on the size and use of a particular commercial building.

But users have complained that the process is overly complicated, making it very difficult to input data about their property portfolios in order to get the most accurate rating bill.

Figures released last week showed that the number of appeals started in the 15 months since the rates were revalued last April had crashed by more than 86pc, a fall which experts blame on difficulties using the appeal system.

Jerry Schurder, head of business rates at consultancy Gerald Eve, said: “Byzantine rules, fines for mistakes and a barely navigable online portal are discouraging even those with legitimate complaints from challenging their rates bills. Businesses are clearly struggling to even get off the starting line in the obstacle course which has been designed by the Government.”

He pointed out that the problem is especially acute for small firms that have neither the resources nor the capabilities to navigate the new system. They are potentially missing out on millions of pounds in refunds, he said.

The HMRC team is understood to be working to improve the “check” element before the end of the year.

Other sources suggested that the VOA was keen to recruit more members of staff, having laid off a number in recent years, as it begins work on the next revaluation of rates in 2021 when all properties will be reassessed.

A spokesman for the VOA said: “Some [business owners] are choosing to move on to submit checks and, if needed, make challenges, and some are not. This is how the service was designed to work.” He added that the previous appeals system was “broken and encouraged speculative appeals”.

Business rates are one of the factors being blamed for the current woes on the British high street.

Because they are linked to building size and location, rather than to profits or turnover, traditional retailers are at a disadvantage to online firms, which are not subject to an equivalent payment. 

Paul Souber, co-head of retail at Colliers, suggested that the Government should change the VAT system in order to more effectively tax companies which trade via the internet.

“Could we create a two-tiered VAT system where, for example, you would pay VAT at 15pc if you shop in a physical store and 22.5pc if you purchase online?” he asked.

“This would be both an incentive for people to shop in person – and also for online retailers to lease physical stores.”

Source: The Telegraph