Businesses should be able to self-assess their rates bills to avoid local authorities facing costly appeals, council leaders have said.

Proposals from the Local Government Association (LGA) would mean businesses have the right to assess their valuation – but they would only have three months to submit a challenge.

It would remove uncertainty and risk from the system, said the LGA. In the last five years almost 900,000 businesses have challenged their bills at a cost of £1.75bn to cover backdated appeals.

With local authorities due to retain 100% of business rates by 2020, councils will soon be liable for all refunds.

Cllr Claire Kober, LGA resources portfolio holder, said: ‘It is clear that no-one is happy with the way business rates are being calculated. The sheer scale of appeals means businesses are fed up with being issued a bill with no input into how much they pay.

‘Councils currently have to fund half of all business rates refunds and are already putting billions aside to cover the financial risk and uncertainty arising from the huge volume of appeals. This means vital resources being diverted away from stretched local services, such as caring for the elderly, supporting businesses and boosting local growth.’

She said changes to business rates over the next five years would make reform of the appeals system ‘even more urgent’ to protect councils from the growing and costly risk of appeals.

‘Councils will face £10bn in cost pressures by the end of the decade, even before the possibility of any further funding reductions in the Spending Review.

‘Every penny will count to give councils the best chance of protecting services over the next few years. Our self-assessment business rates proposals would free them to use the money put aside to cover the risk of appeals to fund vital services and help plug growing funding gaps.’