A backlog of hundreds of thousands of appeals concerning business rates, made to the HM Revenue & Customs’ Valuation Office, has raised concerns that hundreds of retailers could go out of business this year waiting to find out whether they are being overcharged.
Business rates are a property tax on businesses, set by Central Government by multiplying a rateable value (provided for each property by the Valuation Office) against a poundage multiplier which is reviewed annually. Although collected by Local Councils, the funds flow to Central Government where they are redistributed across the country to pay for services.
The Valuation Office Agency must, by law, revalue all non-domestic properties every five years to take account of movements in the market rental values of commercial properties. As such, a revaluation took place in 2008 which has resulted in new rates payable from April 2010.
For many small businesses, this has meant increased costs, set against a testing background of stiff competition from the internet and from out of town shopping centres. Each business has the right to appeal within six months for changes to the 2005 rateable values and until 31 March 2015 for changes to the 2010 list. With many businesses struggling, and with the appeal process being free of charge, the number of appeals has been understandably high.
The most recently available figures show a backlog of 250,000 appealers yet to receive an answer. The British Retail Consortium (BRC) has stated that this could be potentially devastating for hundreds of British businesses:
“We are aware of significant backlogs since the revaluation in 2008 and the new rates which came in in 2010.
“We got a lot of feedback from retailers who tell us that they are having problems claiming money back. This is going to cause a big cash-flow problem, and it is often only the big firms which have the resources to try appealing.”
The BRC estimates that the increases in rates have cost retailers £500m over the last two years, with a further £175m set to be paid in 2013. Many are arguing that the Government should be looking leniently upon retailers who are struggling to compete with online providers that don’t have to contend with taxes only applicable to ‘bricks and mortar’ shops.
The fears are that many others will soon join HMV, Jessops and Blockbuster in insolvency and that high rates and an inefficient appeals process are only speeding the decline of the traditional British high street.
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SRJ / LCB