Business rates reform – there is a prospect of SMEs being exempt

It is three months since the BIS (Business, Innovation and Skills) select committee of MPs published its findings on the current system of business rates and called them not fit for purpose and in need of fundamental reform.

Its suggestion was to replace business rates with a sales tax, something the Government has rejected on the grounds that the UK already has a sales tax – VAT.

There have been various suggestions from interested parties about what needs to be done.  The BRC (British Retail Consortium) proposed that small businesses with a rateable value of below £12,000 should be freed from paying the tax, something that would benefit an estimated 100,000 businesses.

Most recently the CBI (Confederation of British Industry) has waded in, calling the current system “outmoded, clunky and regressive”.

It has suggested that there should be more frequent rate reviews, that the tax should be linked to rental values rather than land values and that small businesses should be exempt.

Given that despite the economic recovery many small businesses are still struggling to survive and even fewer are able to grow we argue that the impact on them of business rates is “disproportionate”.

It time the Government grasped the nettle rather than kick the can down the road with a further delay that is expected following the Autumn review.

With support from the BRC and CBI, small businesses and their representative organisations should become proactive by lobbying Ministers and MPs for change, especially given the prospect of being exempt from business rates.

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