Plans to assess the current business rates system in England, in what the government has called the most “wide-ranging” review in a generation, have been welcomed by the sector, with many putting forward their own suggestions for change.
The British Property Federation was one of the first to set out its suggestions for a new system, which it said should be responsive to the wider economy, based on up-to-date property values and designed to encourage investment.
Chief executive of the federation, Melanie Leech, said: “The current system, where businesses continue to pay the same, arbitrary, amount each year, regardless of wider economic conditions, constrains development and prevents businesses from investing in our towns and cities – particularly in places that are struggling and that need investment the most.
“We would urge all parties to consider a wider definition of what is ‘fiscally neutral’, considering how rates may change from year to year but still raise a similar amount across the business cycle, or through the greater economic activity that business rates reform will encourage.”
Neil Stockham, tax partner at business advisory and accountancy firm BDO, described the review as “long overdue.”
“While it’s promising to see that the Treasury is open to considering a change in tax base and a possible move away from rateable values, the real challenge will lie in how any positive changes can be introduced to replace the current outmoded system and still preserve tax neutrality.”
“There is likely to be a long period of review and consultation such that any benefits of change are unlikely to filter through until well into the next parliament. It will therefore be a watching brief for some time yet which will offer little respite for mid-market retailers who continue to feel the pain of rates set in 2008, rateable values which take no account of the fall in property prices since the recession.”
Head of retail and consumer brands at national audit, tax and advisory firm Crowe Clark Whitehill, Jeremy Cooper, suggested rates be based on the value of sales instead of “artificial property rateable values.”
“Having a system that does not penalise the retail sector when economic times are tough would be fairer and provide an incentive and motivation for retailers to increase business.
“A sales-based system is motivational and provides a stimulus to the local community and local economies and also motivates local authorities to improve the look and infrastructure of a town / region to grow sales and hence their tax take.”