- Delay in business rates reform cost BHS £75m over a five-year period
- The 2013 delay in business rates reform affected 90% of BHS store estate
- The Government conducted the last business rates revaluation in 2010
BHS incurred annual costs of £15m over five years owing to the delay in business rates revaluation, according to Colliers International.
Business rates are meant to be recalculated every five years. But the last revaluation was in 2010, owing to the Government’s decision in 2013 to delay the 2015 revision, in which thousands of retailers, including 90% of BHS stores, would have seen reduced rates.
What’s more, because much of the work involved in the last revaluation was completed before the property crash, ‘rates higher than rents’ are prevalent across many parts of Britain.
New research from Colliers International estimates that BHS could have saved more than £15m a year, or £75m over the five-year business rates period, had the revaluation taken place as normal.
Colliers head of rating John Webber said: “The Government decision to delay the business rates revaluation in 2015 certainly had an impact on BHS.
“It’s hard to know whether it was one of the final nails in the coffin, but clearly a £75m saving is a significant amount of money. By delaying the revaluation, Middlesbrough has been forced to pay for Mayfair for far too long in terms of business rates.
“Looking forward to the revaluation later this year, even in London – where we predict business rates increases for a lot of town centres – BHS could have saved something like £650,000 in rates.
“Given that almost every other retail centre in the UK is predicted to have a drop in business rates, some respite was on the horizon for BHS. The fact remains that the current business rates regime has done nothing to stimulate healthy high streets.”
BHS’s debts stand at £1.3bn overall, including a £571m pensions blackhole.
Colliers is campaigning for business rates reform, including more funding for the Valuation Office Agency and more frequent revaluations of every three years at least by 2023.