Laura Sharman 11 August 2015

Councils forced to refund millions after ‘unfair’ business rate ruling

Councils forced to refund millions after ‘unfair’ business rate ruling image

Councils in Worcestershire have warned that changes to the way business rates are calculated for GP surgeries will cost local authorities millions of pounds.

This year, a number of GP surgeries have made successful appeals against the amount they pay in business rates, after a valuation tribunal ruling found purpose built GP surgeries should pay significantly less.

Worcestershire County Council, Worcester City Council, Wychavon District Council, Malvern Hills District Council and Hereford & Worcester Fire Authority have written to the Government calling for an urgent review of the situation, saying councils will need to refund millions of pounds.

It is estimated surgeries in Wychavon will receive a £3.5m refund and £600,000 a year on an on-going basis from this financial year, while surgeries in Malvern Hills will receive a £3m refund and £400,000 a year. It is understood that refunds will be retained by NHS England and the future money by local Clinical Commissioning Groups.

Cllr Paul Cumming, portfolio holder for finance on Malvern Hills District Council, said: 'We know a number of other authorities have been similarly affected and expect the issue to eventually have an impact across the country. We are raising the issue and the unfairness of the situation with MPs, the LGA and district council representative bodies.

‘This decision will place even more strain on our finances and whilst front line services have been protected from the cuts we've had to make so far, this new situation may put them at risk.’

Cllr Lynne Duffy, portfolio holder for resources on Wychavon District Council, added: ‘The one off refund will have to come from our cash reserves and the on-going loss will have to be made up through further efficiency savings, carrying out more income generating work for other councils and growing the business rates base by providing land for new and expanding businesses.’

The councils are calling for support from the Government, arguing that it is only since 2013 that councils have been able to retain half of the business rate they collect locally.

Visit The MJ for an in-depth look at the ruling (£).

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