Philip Hammond decided to change the law to ensure that where a business has been impacted by the Supreme Court ruling, it can have its original bill reinstated and backdated.
Originally, the way that the Valuation Office Agency (VOA) assessed staircases, meant small businesses were receiving individual rate bills for each floor they occupied and many were therefore facing backdated business rate bills.
This evaluation method largely came about as a result of the Woolway v Mazars case in 2015. Mazars successfully applied to the Valuation Tribunal and Upper Tribunal to have the two office floors it occupied treated as one hereditament. However, Woolway then successfully appealed to the Supreme Court to have these decisions overturned.
The chancellor had previously suggested that the controversial tax could be axed, admitting it added business uncertainty. He said during a Treasury Committee hearing last month that he was “certainly looking at” legislative steps to end the staircase tax.
But in Wednesday’s Budget, Hammond said he had listened to businesses affected by the tax and decided to scrap it, at same time as asking cross-party backing to speed the measure through.
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He also said pubs will see a £1,000 discount with a rateable value of less than £100,000 for one more year to March 2019. Moreover, from the next revaluation onwards, revaluations will take place every three years, instead of the original five.
The Federation of Small Businesses (FSB), one of the major opponents of the tax, said scrapping the tax would “throw a lifeline to thousands of small firms that had no time to prepare for this completely unfair and retrospective levy”.
Mike Cherry, FSB national chairman, said, “The chancellor has done the right thing by reinstating original business rates bills. We hope the end of the staircase tax marks the first step towards wholesale reform of the regressive business rates system.”
Gerry Biddle, director of business rates at Deloitte Real Estate, also welcomed the move, pointing out that any business affected by this decision “can now look forward to having its basis of business rate assessment reinstated and backdated”.
However, Phil Vernon, head of rating at PwC, warned that the government needs to “tread carefully because putting valuation practice into legislation has historically been fraught with difficulties, and can have unexpected outcomes such as higher rate bills".