News: NHS business rates challenge could cost 'hundreds of millions'

26th January 2016

Local government could face a bill running into hundreds of millions of pounds after more than 100 NHS trusts demand business rates relief backdated for six years.  Many local authorities with a trust hospital in their area received a letter from ratings agents at Bilfinger GVA demanding that mandatory charitable relief should be granted on NHS property.  One district council is understood to have calculated its backdated bill to work out at more than £9m, with a loss of income of £1.74m for 2016/17.   

An answer to a technical enquiry to the IRRV a few years ago concluded that NHS trusts are not entitled to relief under section 47 of the Local government Finance Act 1988. This was because trusts are not considered charitable organisations but rather public sector funded organisations with boards of directors and not trustees.  However, the letter from Bilfinger GVA received by authorities contained a barrister's opinion that relief was applicable.

Richard Harbord, former chief executive of Boston Borough Council, said: "To some extent this does seem a waste of resources as the two parties are both in the public sector. The decision to give relief would be good for NHS deficits but could be disastrous for local authorities."   

 

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