The Welsh Government has published the findings of its consultation on “Measures to Address Avoidance of Non-Domestic Rates”, setting out how it plans to tackle business rates avoidance in Wales.

The consultation focused on two main proposals aimed at strengthening the Welsh Government’s framework for business rates compliance and reducing non-domestic rates avoidance:

1. Defining artificial avoidance arrangements – to implement the general anti-avoidance framework already in place.
2. Introducing a duty to report changes in circumstances – requiring business ratepayers in Wales to notify billing authorities of certain changes, with financial penalties for failure to comply.

The Welsh Government previously estimated that £10–£20 million per year – around 1–2% of total business rates income – is lost to rates avoidance.

Consultation Responses

The consultation received 25 responses from local authorities, representative organisations, rating professionals, and businesses. And while most respondents supported the general aim of tackling avoidance, views were split across sectors:

• Billing authorities broadly supported the proposals.
• Industry representatives and business ratepayers raised several concerns, including:
  • Risk that the definitions could capture legitimate commercial occupation.
  • Limited resources for billing authorities to manage new responsibilities.
  • Possible inconsistencies in interpretation across different local authorities.
  • The view that rates mitigation remains a lawful and necessary business practice.
  • Potential duplication between the proposed duty to report and the new Valuation Office Agency (VOA) information requirements.

Welsh Government Response

In response, the Welsh Government confirmed that the forthcoming regulations will include a non-exhaustive list of circumstances a billing authority may consider when assessing whether an arrangement is artificial. These may include:

• Whether the occupier’s business activity is genuinely commercial and not primarily designed to reduce rates liability.
• The proportion of the property used for business purposes.
• The duration of occupation.
• Whether the property’s characteristics are consistent with the business conducted.

Next Steps

The Welsh Government intends to introduce the new regulations to the Senedd Cymru, with the aim of implementing them from 1 April 2026, subject to approval.

The Government says these measures are intended to strengthen the integrity of the non-domestic rates system in Wales, ensuring businesses contribute fairly to local services.

What Businesses Should Do Now

1. Review existing business rates mitigation
   Begin a review of any ongoing mitigation arrangements and when these may conclude.
2. Ensure property records are up to date
   Ensure your property details are current. Local billing authorities need to be notified of any changes within 60 days to avoid penalties.
3. Notify your local billing authority
   If you manage your own business rates obligations, you must inform your local authority of any relevant changes, including:
   • Becoming or ceasing to be the ratepayer for a property.
   • Taking occupation of a previously vacant property.
   • Vacating or transferring occupation of a property.

You can read the full consultation report and draft regulations here:
Welsh Government – Measures to address avoidance of non-domestic rates

For further advice or support with your business rates strategy in Wales, contact Dunlop Heywood: info@dunlopheywood.com

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