Four charity umbrella bodies have called on the government to not give anti-avoidance powers to local authorities as part of measures to clamp down on the abuse of business rate relief.
The Department for Communities and Local Government and the Treasury published a consultation paper in December containing proposals to deal with the abuse.
The paper said that one of the four most popular methods of avoidance appeared to include the avoidance of empty property rates through "artificial or contrived arrangements where charities own a property and it appears that when next in use it will be mostly for charitable purposes".
It asked for views on giving local authorities general or more specific anti-avoidance powers that would enable them to withhold reliefs and exemptions "where they reasonably conclude that the main purpose or one of the main purposes of the ratepayer’s occupation or arrangements is to receive the relief or exemption, and/or that the arrangements or occupation is contrived or artificial".
A joint response to the consultation, which closed last week, from the Charity Finance Group, the Institute of Fundraising, the Charity Retail Association and the National Council for Voluntary Organisations, argues against this idea.
The organisations say that local authorities are not in a position to judge independently whether a property is being occupied by a charity mainly for purposes of business rate relief, and the proposals could hinder innovation among charities.
"We believe that this is an issue that should be handled independently through the legal system," the response says. "This is particularly important given recent changes to business rate relief through the business rate retention scheme, which gives local authorities an incentive to reduce the amount claimed through business rates."
The response says that most charities would not have the resources to challenge decisions, which could lead to those that carry out legitimate activities being deprived of rate relief with no means of recourse.
"Charities carry out a diverse range of work and often strive to find innovative ways to use property in order to meet the needs of their beneficiaries," the response says. "A sweeping anti-avoidance rule would be likely to lead to local authorities taking a risk-adverse attitude that could reduce innovation in the sector, having a negative impact on communities."
The response says there is insufficient data on the scale of business rate relief avoidance through charitable vehicles.
It recommends that the government should aim to improve communication with charities about the rules for business rate relief, alongside the Charity Commission and charity membership bodies.
It says the rules around business rates are vague and potentially confusing for charities, and calls for up-to-date guidance for voluntary sector organisations.