British retail calls on UK government for business rate reform

Small businesses would no longer have to pay business rates under proposals from the British Retail Consortium, but will the government listen?

Business rates have been a recurring theme for small firms over the past few years, with continual calls for the government to overhaul the current system.

But under proposals submitted to a government consultation on administering company taxes, more than 100,000 small businesses would no longer have to pay the notoriously high fees.

The Telegraph reports that the British Retail Consortium (BRC) has suggested removing businesses from the tax if they have a rateable value of less than £12,000. It claims the financial losses would be relatively small for the government – the firms that would be exempted currently make up nearly two-thirds of the total eligible high street stores, but pay just six per cent of all the government’s business rate receipts.

BRC believes its proposed system would reduce the administrative burden for government valuers and give them more resources to monitor the value of eligible properties, ensuring that rates rise in line with economic conditions in the future.

Business rates will have an estimated value of £27 billion for HMRC this year, and many companies have complained that costs are rising ahead of inflation and before economic recovery has managed to improve conditions on the high street.

It isn’t unusual for retailers to lobby against the business rates system. In fact, it’s been a theme in the past few years, and in October last year BRC appointed Ernst & Young (EY) to collaborate with it to consider options for a complete overhaul of the existing regime.

Although the current government consultation forms part of a review of rates announced by the chancellor George Osborne in the Autumn Statement, retailers are pushing for widespread reform instead of small tweaks.

When the EY partnership was launched, global head of tax policy at the firm Chris Sanger summed up what many businesses think of the existing system.

“The business rates regime is a 400-year-old system, with an assessment approach designed over 50 years ago. It is complex to operate, creating expensive bureaucracy and confusion around its role, given it has become a national tax raised theoretically for local services,” he explained.

“The time is ripe for reform.”