A group of trade bodies, including the British Retail Consortium (BRC), have written to the Government urging reform of the business rates revaluation.
The letter addressed to members of parliament raises what the bodies believe to be “fundamental issues” with the planned changes to rates, which come into force on April 1.
The 11 trade bodies claim the burden of business rates is too high and that the rates system “penalises businesses that invest and improve their properties”.
Signed by BRC chief executive Helen Dickinson, the letter also calls upon Government to increase the frequency of revaluations “to deliver more accurate rates bills”.
Earlier this week, Chancellor Philip Hammond claimed he was listening to concerns and hinted that there may be concessions in next month’s Budget.
Communities secretary Sajid Javid confirmed yesterday that Hammond, on March 8, will announce new measures to “level the playing field” and help small firms, as part of a wider and longer-term re-examination of the business rates system.
Commenting on the letter, Dickinson said: “The Chancellor should take the opportunity to ensure businesses large and small receive business rates reductions following the revaluation immediately, and implement the same protections for those facing large increases that were in place during the last revaluation in 2010.”
Read the letter in full:
Dear Members of Parliament
BUSINESS RATE REFORM
We are a collection of business organisations representing thousands of businesses of all sizes and employing millions of people across the UK. We believe that the future of the business rates system will be a key factor in shaping investment and growth in the UK economy for decades to come, meaning that how the Government addresses the detrimental impact of the existing rates system is a key question for us all.
We recognise that the 2017 business rates revaluation will result in increased bills for some and decreased bills for others, and the positive action the Government has taken with the £6.7 billion package of support that has provided welcome relief for the smallest businesses. The burden has grown from a third of rateable value in 1990 compared to almost half today and so irrespective of the outcome of the revaluation the overall burden needs to come down for businesses large and small. There is widespread consensus in the business community that the system is unfair, outdated, and deters investment.
We do not believe that the package of reforms delivered by the Government acted on a ‘radical’ and ‘comprehensive’ review of the business rates system. There are still fundamental issues that have not yet been addressed by the Government which should be re-explored in a revised business tax road map;
The burden of business rates is too high and at a tipping point
While we have one of the most competitive corporation tax rates in Europe we have the highest property taxes. In the long-term Government should revisit business rates with an aim to reduce the burden for businesses, and in the meantime move forward by linking the multiplier to CPI indexation before 2020 and ease the increases faced by businesses of all sizes through transitional relief. The high burden not only hampers domestic business investment, it is a barrier to new inward investment in the UK in the post Brexit Britain. Recent research conducted on international investment in UK retail, following interviews with 130 global retailers at the C-suite level, highlighted business rates as the major barrier to inward investment.
The proposed appeals system will deter businesses from appealing their rates
One of the most pressing issues is the proposed appeal system “Check, Challenge, Appeal”. We understand the principles of “Check, Challenge, Appeal” and agree there is a real need to avoid speculative claims that clog up the system. However, proposals that would see certain appeals dismissed if they are considered outside the bounds of “reasonable professional judgement” must be revised immediately as they threaten to undermine trust in our system and could jeopardise the future of businesses with incorrect bills. Businesses should receive accurate rating assessments and receive a fair hearing where this has not reached their expectations.
There is a need to increase the frequency of revaluations to deliver more accurate rates bills
Five yearly revaluations store up problems and lead to spikes in businesses rates costs. Moving to more frequent revaluations as the Government has committed to will deliver more accurate billing and certainty for businesses. We are willing partners to help ensure we avoid having another five or seven years pass before the next revaluation. One solution to simplify the revaluation system would be to completely remove the smallest businesses from the rating system.
The rates system penalises businesses that invest and improve their properties
The rates system is acting as a brake on investment and needs to be reformed so businesses are incentivised to invest. If a business takes a risk by making property investments to improve their offer to consumers or increase productivity their business rates bills increase. The Government needs to revisit the definition of plant and machinery and explore incentivising new business investments.
The future of business rates is a key priority for us and we want to work with the Government to deliver meaningful reform. We want to see action from the Chancellor in the Budget to ease the burden on businesses that will see an increase in their rates bills but also a longer-term commitment from the Government to review property taxation in the UK. We would urge you to engage with businesses in your constituency and to help them by writing to the Chancellor to reinforce the issues set out in this letter.
On behalf of
James Lowman, Chief Executive
Association of Convenience Stores
Kate Nicholls, Chief Executive
Association of Licensed Multiple Retailers
Brigid Simmonds OBE, Chief Executive
British Beer and Pub Association
Mike Spicer, Director of Research and Economics
British Chambers of Commerce
Ufi Ibrahim, CEO
British Hospitality Association
Melanie Leech CBE, Chief Executive
British Property Federation
Helen Dickinson OBE, Chief Executive
British Retail Consortium
Josh Hardie, Deputy Director General
Confederation of British Industry
Ross Murray, President
Country Land and Business Association
Martin McTague, National Policy Director
Federation of Small Businesses
Edward Cooke, Chief Executive