Delays in processing business rate appeals are costing English businesses £300 million per year according to new research from CVS, the business rates specialist.

CVS has uncovered a backlog of over 328,000 business rate appeals at the Valuation Office Agency (VOA), the agency in charge of calculating business rates and council tax in England and Wales. A third of these appeals date back to 2005.

The result is that tens of thousands of business ratepayers have paid too much and, to compound the problem, they are unable to retrieve the money owed to them as a result of the inefficient appeals process.

At the VOA’s current rate of performance, it will take a further 2.4 years to clear the backlog of 2010 appeals. Thousands of appeals against the 2005 ratings list are also still outstanding and, to compound the problem, the VOA is holding over appeals from 2005 to consider alongside those from 2010 creating an additional and extended backlog.

This inability to resolve appeals in a timely fashion and return money to businesses that have over-paid is fast becoming a business critical issue according to CVS, and is preventing SME businesses from contributing to a private sector recovery.

Don Baker, National Head of Rating at CVS, said: “The VOA’s speed of processing business rate appeals is unacceptably slow. At the moment, businesses need all the revenue they can get and the VOA’s inefficiency is penalising companies unfairly and preventing those companies from recovering money that is rightfully theirs. This is weakening the financial health of a large number of SMEs across the country and damaging businesses’ ability to invest and grow. Urgent action is needed to clear the backlog and to give SMEs a fighting chance of leading the recovery.”

New procedures introduced in January 2011 are to blame for the appeals backlog. CVS would like to see greater clarity from the VOA on these new procedures, a reduction of bureaucracy in the system and improved compliance with the appeal procedures across the country. Together, these changes would help to speed up the appeals process.

This inconsistency has resulted in appeals being struck out unnecessarily, even in cases where the settlement of the appeal has been concluded but not formalised by the two parties.

Don Baker continues: “It is just not acceptable that businesses have to wait years for their business rate appeal to be settled. Every day the appeals backlog continues to grow and the delays are harming businesses’ ability to invest and contribute to local economic growth. The Government is championing a growth agenda and looking to private sector firms – and that means SMEs in particular – to stimulate investment. That policy and the VOA’s current performance are completely inconsistent.”

Mandy Hoare, an independent cafe owner from Truro, Cornwall, said: “In this economic climate independent business owners like me need all the help we can get. I can appreciate the VOA want to complete their appeals correctly, but the length of time to wait is just crazy. Firms who have paid too much rates should have that money returned to them. That’s fair and equitable and will help SME businesses support the growth agenda the Government is keen to push.”

Tony Lynch, the owner of an independent casino in Sutton, Surrey, said: “Our business rates have risen significantly over the past year and are a major annual cost to us and all SME businesses like ours. All we want to do is to pay the right amount of rates but these delays mean I have to keep paying over the odds for years at a time. The delays are hurting my ability to invest in my business.”

Contact the team in CVS’s Manchester office at Oakland House, Talbot Road, Old Trafford, Manchester, M16 0PQ or on 0161 291 0330.