Government policies on business rates could have cost House of Fraser up to £3m in extra tax, it has been revealed.
Analysis of HoF’s tax liabilities by real estate adviser Altus Group found that 28 of the 31 stores earmarked for closure are affected by transitional relief arrangements, which limits how quickly business rates can rise or fall after properties are revalued.
The business rates for the HoF stores for 2017 to 2021 would be £54.94m, Altus reported. However without the transitional relief caps, the bill could have fallen as low as £51.77m. For the current financial year the firm calculated that HoF would be likely to overpay around £988,000 in business rates.
The government has pledged up to £3.35bn over four years to help all businesses affected by business rate reduction caps.
Robert Hayton, head of business rates at Altus Group, says the government should now rethink transitional relief: “Transitional relief should apply only to those bills which increase between one revaluation period and the next.
“Where local economies are struggling and values fall, ratepayers need to benefit from the full reduction immediately. The cost of upwards transition could be paid for by a small supplement. It would be like an insurance premium against a steep increase in liability.”