Simply if you thought it could not get any worse, April enterprise charges return
The government needs to say whether the current annual vacation rate for retail and hospitality businesses will be extended.
So says John Webber, head of business rates at real estate consultancy Colliers International, which has overseen the number of appeals against the Valuation Office Agency (VOA), part of HM Revenue & Customs, which is tasked with handling complaints under a three-tier “Check, Challenge, Appeal” procedure.
Since the pandemic started in the UK in March, around 170,000 companies have taken the first step to appeal their interest rates, according to Colliers. That’s more than the total in the three previous years when 159,000 asked for their rates.
> See also: Chancellor Rishi Sunak can cut corporate rates in favor of a property tax
In part, it’s the government’s fault that the VOA is so overflowing with business rate complaints.
Businesses are now being forced into challenging ratings as the government has yet to announce whether to extend the year-long vacation it announced in March for retail and hospitality rates.
Business tariffs are a tax on real estate used for commercial purposes based on an estimate of the cost of renting the property in the open market: the “pro rata value”. The current assessable values will be determined according to the rents on April 1st, 2015
In the past tax year, local authorities charged corporate rates of £ 25.6 billion.
> See also: Influential MPs are calling on the government to reconsider broken business rates
Given the scale of the Covid pandemic and the Brexit crisis, you can see why small business owners are asking for their business rates to be cut.
Said Webber, “If you’re in a store, pub, or restaurant, count down the days until you’re stuck with a tariff bill again. What you would do is challenge the assessable values so that they are as low as possible when the next assessable value is reached. “
According to the Chancellor, Chancellor Rishi Sunak must now inform companies that either the one-year vacation for business tariffs will be extended by another year or that small businesses, for example, will only have to pay half of their current tariffs by April 2022.
Webber said, “The sooner you do it, the more everyone will feel at ease by next April. At the moment everyone is assuming that there will be 100 percent liability from next April. It’s not a great place for the government to be silent right now. All of the good work they did at the beginning of the lockdown will be wasted if they don’t make an announcement soon.
“It’s not about closing business premises, but about people losing their jobs. The longer the government delays this announcement, the more appeals will be received and the more jobs will be created in the sectors at risk. “
Otherwise, review complaints will continue to flow into the non-waving, but drowning review bureau.
“As the days get closer to April next year, if you’re a company and you’re working out your business plan for next year, expect to pay 100 percent from next year, hence all of the challenges,” Webber said.
Webber notes that many companies are now challenging their rate ratings because of Material Change of Circumstance (MCC).
Webber said: “In the history of the assessment, there will never be a greater material change in circumstances than Covid-19. It is certainly a valid change in material. “
Although Webber expects most of these MCC appeals to win, the lag between an office small business paying its prices upfront and then receiving a discount could be a year.
Webber thinks it makes more sense – assuming there is no further collective vacation – for the government to grant a collective discount now and “cut the middleman” so that office residents pay bills they can afford and what ultimately they would pay anyway once the appeal discount is approved.
A separate review of the tariff system is underway and business groups have called for tariffs to be frozen for the next two years and then reduced to reflect the impact of the pandemic.
Learn more about business rates
Raise corporate tax to lower corporate rates and challenge the bosses of retail