Department store Beales, currently at risk of administration, is estimated to have overpaid £1.06m in business rate since 2017.
The overpayment is due to downwards phasing introduced following the 2017 revaluation, according to real estate firm Colliers International.
Beales warned it could collapse into administration if it fails to find a buyer. The privately owned business hired professional services firm KPMG in December to lead a strategic review. It is now thought to be in talks with two potential buyers.
Colliers estimates that Beales’ 22 UK stores paid a total of £2.8m in business rates this year. Its rateable value declined 14% in the 2017 valuation but in reality, its rates bill only dropped 3% in 2017/18 and 1% and 2% in the subsequent years.
“Of course Beales is not alone. Many other stores who have joined the long list of CVAs and administrations since 2017 have suffered in a similar way,” said John Webber, head of business rates at Colliers international. “A number of Debenhams and House of Fraser stores on the closure lists were there because they were paying artificially high business rates due to phased downwards transition.”
Earlier this week Frasers Group, which owns House of Fraser, called for an “urgent fundamental review” of business rates in a letter to the prime minister Boris Johnson.
Mike Ashley’s retail group reconfirmed that without reform it would have to close further House of Fraser stores that would become unsustainable.
The letter proposed a single approach to transitional relief regardless of property size, and one that results “in the correct rates bill being reached at the end of the transitional period”.