Business rates review – have your say!

Business rates have long been a point of contention amongst many businesses, and not least in the Retail sector.

According to the British Retail Consortium, retailers are responsible for raising £7 billion in business rates annually, paying £2.30 in business rates for every £1 paid in corporation tax.  The Covid-19 measures introduced a welcome 12 months’ business rates holiday for the tax year 2020/2021 for all businesses in the Retail and Hospitality & Leisure sectors, in recognition that this will make a considerable difference to a hard hit sector.

Due to the transforming face of retail, with the increase in technology and changing consumer habits already in full swing before the immense challenges posed by Covid-19 disruption, UK high streets have lost many familiar brands in recent years (BHS, Mothercare, Oasis and Warehouse, Debenhams, Cath Kidson, TM Lewin, to name a fraction), either due to permanent closure or restructuring of stores while in administration.  Whilst there are many factors involved in these high rates of demise, it is not surprising that retailers have been amongst the most vocal in pushing for a reform of the business rate system, which, it is argued, treats bricks and mortar operators differently to online retailers, creating an unfair playing field in the market.

The Chancellor announced a fundamental review of business rates in his Budget 2020 speech, following a call to action by many lobby groups, and HM Treasury have recently released their request for evidence from interested parties.

The request is in two tranches.  Tranche 1 seeks views on the way the multiplier is set and whether the current raft of reliefs and exemptions fulfil their objectives, whilst tranche 2 considers revaluations, valuation methods and alternatives to business rates, such as an online sales tax.  A digital services tax has already been introduced from 1 April 2020, and the rules include a 2% rate on taxable revenues for the provision of online market place services, so the appetite for taxing digital businesses in the UK is already clear.  For further information on digital services tax, see our blog.

Details of the business rates consultation and how to respond can be found here.  Stakeholders are required to provide responses relating to Tranche 1 (the multiplier and reliefs sections of the review), and any other areas of pressing concern, by 18th September 2020.

Responses to all other sections (Tranche 2) are required by 31st October 2020.