If business rates were already controversial before the current rates revaluation, now the debate about them is hitting critical mass. Recently, thirteen prominent business groups, including the Federation of Small Businesses, the British Retail Consortium and the CBI signed a joint letter to the government, with other groups, making clear their opposition to the changes.
Lord Tebbit has also had his say, as has Vince Cable. They are warning the government about the impact the new business rates, on the back of the revaluation, will have on the economy.
But are there realistic alternatives to business rates?
Pie in the Sky or Missed Opportunity?
“In 2014, the British Retail Consortium (BRC) called for a complete overhaul of the business rates system,” Paul Giness, of The Beattie Partnership, points out. “The BRC offered three alternatives to the current rates regime, involving discounting, and, more radically, charges based on energy use.”
The BRC’s options included discounted rates for companies paying UK corporation tax; or alternatively a discount linked to the number of members of staff a business employs.
The energy use proposal would be a new tax to replace business rates altogether, linked to the climate change levy.
“As small businesses are excluded from the levy, they would be likely to be outside the rates system entirely,” Paul remarks.
“Despite its continued misgivings over the current rates system, the BRC eventually shelved these proposals, stating that it did not think the time was right for such a radical overhaul”, explains Paul.
“Any radical future change will look possibly outlandish viewed in the present,” Paul comments.
“For many businesses, the business rates revaluation feels radical and threatening”
Paul Giness, The Beattie Partnership
What Next for Business Rates?
There will be winners and losers from the rates revaluation, but for many retailers they face uncertain times ahead, against the backdrop of Brexit and potential changes to global trade.
“The government has already rejected any suggestion that it has underestimated the impact of business rates,” Paul says. “And our own research suggests that the impact of the new rates will be variable across different sectors. However, perception is important, and anything that damages the confidence of businesses must be looked at as a matter of urgency.”
It is now reported that the government is considering a self-assessment system for business rates, like income tax. Whether this simply places a greater burden on the ratepayer remains to be seen.
“There will be transitional arrangements,” says Paul, “so it’s not yet clear what the full impact of the business rates revaluation will be in practice. ”
“In the meantime, for anyone who is at all doubtful about their business rates should check the facts on the draft rating list, and consider the new ‘check, challenge and appeal‘ process as an option,” concludes Paul. “But if you need advice, act now.”
To discover how the rates revaluation could impact your business, please call The Beattie Partnership on 0161 228 2224.