Business Rates – concerns continue – can you help?

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Concern regarding the fitness for purpose of the current bricks and mortar based non-domestic business rates system continue to be expressed nationally by various bodies. We are also raising our concerns on your behalf from a tourism and destination prospective from two potentially conflicting angles: the need for local and National Government to raise adequate revenue to pay for necessary infrastructure and service provision in local destinations and the need to ensure that physical businesses that form part of the social and economic fabric of our destinations remain viable and continue to be able to trade physically in our destinations.  In the context of visitor destination, indeed in the context of almost any community, the two are by no means mutually exclusive.

Under the current property based system there is a fine balance to be struck between public revenue and business viability.  In reality the answer almost certainly lies with a far more radical new approach to business taxes that goes way beyond just a charge based on the size and location of your physical business premises. Whether Government have an appetite to revolutionize their local business revenue collection methods, as opposed to doing just another cost neutral review of who pay what from the existing tax base, remains to be seen.

The latest concerns we are aware of relate to what is being dubbed as, “the staircase tax” and, separately,  the growing realization among businesses but not yet necessarily among the voting public, that the much vaunted transitional business rate relief brought in to smooth the pain of the recent revaluation increases for some businesses in England and Wales, are being paid for by an equal and opposite transitional cap on benefit to those businesses whose rates have gone down as a result of the review, I.e. it is a cost neutral exercise.  Like everything to do with business rates both areas are complicated and are judged by a combination of hard and fast rules and the sometimes seemingly arbitrary rulings of the local valuation office. More background detail can be found at: https://www.gov.uk/apply-for-business-rate-relief

In the case of the “staircase tax” a recent court ruling has meant that businesses that have their premises split over more than one floor or corridor in a building with more than one tenant and shared access (as opposed to say a separate set of stairs, exclusively linking and for the use of that business) must now must pay separate business rates for each part of the building they occupy, which almost always results in significantly greater total bill than that of their old single business rate. There may be some logic in this approach and doubtless some may even have exploited the possible confusion of multiple tenancy arrangements in the past? However, the fact that these businesses are being asked to retrospectively pay these increases back to 2015 in England and 2010 in Wales, when they couldn’t possibly have forecast or accrued for them, seems harsh in the extreme.

The transitional relief and transitional reduction capping which is being applied differently in both England and Wales is taking sometime to introduce.  As it is introduced the realities are coming home to roost, and particularly for those that are seeing significant increases which will still come in to full effect but now over a period of up to three years rather than immediately.  These businesses may have a little more time to adapt but there is no guarantee that any of these adaptions will be in a positive direction for the business or the locality.

If you have any particularly harsh local example of business rates problems, especially but not exclusively tourism or visitor economy related then can please let me know the detail.  I would be particularly keen to hear of businesses that are being forced to plan to adapt in a negative manner to cope with the increased rates.   Examples, rather than general principles are what will seize official’s and politician’s attention, so your assistance in gathering these would be appreciated.

 

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