Council leaders have said that businesses should have the right to self-assess how much they should pay in business rates from 2020, when local authorities will retain 100% of all business rate income.
The Government recently announced the biggest shake-up of the system for 25 years.
Now the Local Government Association (LGA) has said the plans to allow councils to retain 100% of business rates by 2020 make further reform imperative in order to protect councils from the growing and costly risk of appeals and ensure businesses are happy with what they pay.
Almost 900,000 businesses have challenged their business rates bill since 2010 with around 330,000 appeals yet to be decided.
Local taxpayers currently have to fund half the cost of any backdated refunds. Councils have been forced to divert £1.75 billion from local services to cover the risk of appeals and refunds over the past five years.
There have been many "damaging appeals" according to the LGA; for instance, a handful of GP surgeries recently secured a landmark legal ruling to reduce their rateable value by more than 60%. It is a case which could have significant consequences nationwide with a further 1,600 similar GP surgery appeals still to be resolved.
The LGA, which represents more than 370 councils in England and Wales, is calling for the Spending Review to hand businesses the right to self-assess their own valuation, currently determined by the Valuation Office Agency, and only be able to challenge their bill for three months once it is finalised.
The LGA said this would ensure businesses pay a rate they think is fair and also offers more certainty for councils about income, reduces the risk of refunds, cuts down on red tape and brings business rates in line with other self-assessment taxes, such as VAT.
Cllr Claire Kober, LGA resources portfolio holder, said: "It is clear that no-one is happy with the way business rates are being calculated. Our self-assessment business rates proposals would free [councils] to use the money put aside to cover the risk of appeals to fund vital services and help plug growing funding gaps."