Exploring the business rates burden

  •    Author: Mike Jasfer

With the Chancellor declaring a 12-month business rates holiday for retailers due to the impact of coronavirus, Furniture News looks back at its retailer panel’s take on a system that, to many, was already broken …
In April last year, business rates rose again, increasing the burden on retailers (arguably disproportionately for those with physical stores) and contributing to store closures and vacant properties. What did Furniture News’ retailer panel think about the development?
Royce Clark (Grampian Furnishers): Don’t get me started on this topic … the whole system needs to be scrapped and a fairer one put in place to take into account all sizes of business – on the high street, out of town, and in particular those who have warehouses with an online presence
David Ashton (JYSK): Unless the Government does something to support the physical retailers then we will continue to see the market suffer. We have a huge imbalance between the pure online retailers and the physical retailers
Jerry Cheshire (Surrey Beds): Yes, and ouch! The business rates system is way out of date and requires urgent reform. My rates are set according to the value of the property I occupy. As you can imagine, in Surrey, properties are expensive. Their values are not something a retailer can control – so we need a fairer system. I am in discussions with my MP and he is being receptive to my concerns and understands how important a reform is. Let’s get Brexit finished, and maybe Parliament can deal with such matters
Mike Murray (Land of Beds): At the time I didn’t think this was fair, and I still don’t. I believe the Government needs to even out the charges paid by bricks-and-mortar retailers and pureplay online retailers – especially those international retailers that don’t pay anywhere near the same taxes as their UK competitors. From any angle you approach it, it doesn’t feel fair 
Peter Harding (Fairway Furniture): The whole business rates system needs changing to something more like a turnover-based tax which cannot be avoided. It is ridiculous that a furniture store of 30,000 sqft pays enormous rates, yet an online business doing perhaps 3-5 times the turnover, trading from a 30,000 sqft distribution centre, pays hugely less. In the South West, our business rates are actually falling, but that is not to say the current scheme is right – it needs fundamental review, and quickly.  I’d like to see a new Conservative Government, if elected, treat this as a high priority
Ross Beveridge (Archers Sleepcentre): Business rates are actually a fantastic way of taxing the super-rich landlords and their parent companies based in their offshore havens. It is easy enough for them to navigate through tax loopholes and hide cash, but much harder to hide a whopping great big shop or retail park (unless you’re David Copperfield, of course). The reality is that a reduction in business rates will allow incoming tenants to offer more than they previously could, leading to increases in rents in the future, and while you may see a very brief small return, in the end the landlord wins. When we look at potential sites, we’re evaluating the overall property costs – not just the rates or rents, but the sum of the two   
Steve Pickering (Sussex Beds): Business rate rises are ultimately not the issue. It is the unfair levy or portion high street retail contributes which is the problem. Buying habits have changed rapidly over the past 20 years with the emergence of ecommerce trading, and the taxation system simply has not kept up. An urgent review is required, with a view to creating a level playing field, ensuring all businesses pay a fair share of taxation – whether UK-based or multinational. Would a simpler sales tax, based on revenue, achieve this?
Read more opinions on the big developments of 2019 in our annual retailer review, in the January 2020 issue of Furniture News.

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