SMEs need help to navigate the business rates system

the potential effects of business rates?Retailers are the most high-profile sector of SMEs that are struggling with business rates and the appeals system following the April 2017 revaluation that came into force last month.

But it is not only the small retailers that are facing challenges.

SMEs’ problems have been repeatedly raised by the Federation of Small Businesses (FSB) and the British Retail Consortium (BRC) both of which have highlighted two issues.

These are the disproportionate business rates rises on smaller businesses compared with larger ones, and a new, revamped appeals system that the FSB in particular has criticised as seemingly “designed to be hostile” to companies.

National FSB chairman Mike Cherry has described the appeals system as bureaucratic and beset by glitches, while offering no in-person support, no phoneline or live chat options and involving a time consuming and opaque process for uploading supporting material when making an appeal.

Why am I not surprised that yet another Government-inspired online system is proving not fit for purpose?  Excessive reliance on digital systems is something to which I shall return in a forthcoming blog.

According to the Government’s guidance on business rates relief SMEs are eligible for relief if their business property’s rateable value is less than £15,000. Those whose property’s rateable value is less than £12,000 are exempt from business rates. There are also transitional reliefs if SMEs’ revaluations took them out of exemption with a cap on bills so that their monthly payments would not increase by more than £50.

However, it seems that 71% of companies are “very dissatisfied” with the Valuation Office appeals process and that appeals had plummeted by as much as 99% between April and December 2017, according to a report in the Daily Telegraph.

On top of this a £500 fine was introduced for any business that was found to have appealed wrongly.

In April the then Communities Minister, Sajid Javid, announced an independent review of the way the business rates system operates. The review is to be led by former Director General for Public Services at Her Majesty’s Treasury, Andrew Hudson. Who had also previously held the position of chief executive of the Valuation Office Agency, as well as having worked in local government. Business rates are collected on the Government’s behalf by local authorities.

Of course, Javid has since relocated to the Home Office, and, so far, there has been no further information on the review.

It is often said that SMEs are the backbone of the UK economy, and according to FSB and BRC figures they inhabit approximately 1 million of the 1.7 million business premises in the UK on which the tax is payable.

If the economy is to survive the still unknown outcomes of Brexit in anything like reasonable shape it will be relying on these SMEs to preserve jobs, to grow and expand.

This means they need a system of fair taxation, a robust and user-friendly rates appeal system and the minimum of red tape and bureaucracy to have a fighting chance of doing more than simply surviving.

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