Now small firms may be forced to work out own rates
BUSINESS RATES RISE ‘ILLEGAL’ ‘DODGY’ BUSINESS RATES DOSSIER
SMALL businesses would be forced to calculate their own rates under plans being considered by the Treasury.
Critics say this would see the cost and administrative burdens unfairly passed on to firms.
It is another blow for the 500,000 cafes, shops, restaurants and post offices which face a rate rise in two months.
A Government review means some businesses will be hit with 3,000 per cent tax rises from April.
On Wednesday Communities Secretary Sajid Javid bowed to pressure, pledging a relief package for firms facing the biggest increase amid fears many would go bust.
Now it has emerged that officials have been consulting the ‘Big Four’ accountancy firms on a self-assessment system.
Businesses would have to estimate the rental value of their own property, on which the tax is based, rather than the Government’s pressured Valuation Office Agency (VOA). The Treasury says this
‘Leaves door open to cowboys’
would ‘significantly’ reduce a backlog of 280,000 appeals lodged by businesses which believe their rates were wrongly revalued in the last round of changes seven years ago.
But lobby groups say it is wrong to lump the complex calculations on Britain’s 2million businesses.
Business rates are similar to council tax but are charged on all commercial properties. They are calculated on the annual rental value of the premises.
Soaring property prices in recent years means many firms have been hit with enormous rate increases.
Last year the Government issued a discussion paper on self-assessment for businesses but it has yet to confirm whether it has approved the plans.
The paper showed that while the Government would provide support and guidance on how to calculate rates, it ‘ recognised that many ratepayers might use an agent’. The Mail understands agency fees for this service would start from £300 and could run into thousands of pounds, putting even more strain on shopkeepers.
Mike Cherry, of the Federation of Small Businesses, said: ‘Small firms don’t have the time or expertise to take on this role.
‘This could leave the door wide open to cowboy surveyors who prey on vulnerable small businesses. We would rather see full disclosure of the VOA’s calculations so that a small f irm can assess whether they should appeal.’
The Government admitted that self-assessment could help achieve its promise to revalue business rates more frequently.
In last year’s Budget, ministers pledged to review business rates every three years.
It is supposed to review rates every five years, but the most recent revaluation was delayed by two years.
Experts say the VOA does not have the resources to review rates every three years and needs help from small businesses.
James Lowman, of The Association of Convenience Stores, said: ‘ We have significant concerns about the extra resources that would be required from retailers to make the system work, especially for the smallest stores.’
Manufacturers’ organisation EEF is also opposing the plans because ‘it will add to the administrative burden for businesses’.
Gerry Biddle, assistant director at Deloitte Real Estate, said: ‘Selfassessment would enable regular changes in valuations using up to date information, but could take several years to implement.’
The Treasury says self-assessment could benefit businesses. Its paper says the move would provide ‘greater control in ensuring their valuations were up to date so that they pay the right amount of business rates’.
It would also align the rates system with the rest of the UK tax regime where self-assessment is commonplace. ‘Self-assessment has been successfully operated by HM Revenue and Customs in other areas of tax, most notably income tax’, the Treasury said. It added the paper ‘does not indicate a government preference and does not discount other options’.