Comment: business rates oversight
Business rates were conspicuous by their absence in the Chancellors Budget last month. This was a big disappointment to many retailers who can now expect an estimated 2.6% increase in rates. By Gavin Matthews, head of retail at Bond Dickinson.
It is not an entirely clear-cut issue of course, as some retailers actually benefit from the lack of action on business rates. A recent study from JLL suggested that while over 40% of retail locations will lose out from the 2015 rating revaluation being deferred to 2017 as is currently the case, 28% will benefit. There are, of course, divisions in the retail sector just as in any other, with geographical and size differences colouring individual perspectives on what should be done.
What is clear, however, is that the business rates system is no longer fit for purpose in a sector that has been transformed by the rise of online shopping. As a law firm it is evident in the work we do every day for retailers, which increasingly involves issues such as getting products and services to market through online and mobile commerce platforms and dealing with data protection issues, as well as the more traditional real estate, employment, brand and tax issues.
Persisting with a system that penalises those retailers on the high street makes no sense unless the government wants an e-commerce-only retail economy, which can’t be the case given its stated desire to save the high street. Yet the current system disincentives retailers from bricks and mortar establishments, which is only going to further damage the high street and the surrounding communities.
Apart from those with internet-only business models, most retailers we speak to want to retain a healthy balance of revenues from bricks and mortar and online offerings. And they consequently want a fair business rates system for those who operate online and those on the high street – both bring benefits to the wider economy and should be able to play on a level playing field.
The Business, Innovation and Skills Select Committee has called for an urgent overhaul of the business rates system. Vince Cable has called for it. And the retail industry has called for it. Taxation is rarely a simple issue and so it is imperative that the Government takes enough time and guidance to get any new system right. But surely common sense must prevail sooner rather than later, so that retailers are given the freedom to grow and high streets can once again thrive at the heart of our communities.
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