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Retailers unite against business rates in letter to chancellor

More than 50 high street retailers have demanded the government launches “a wholesale review of business taxes to create a tax regime fit for the 21st century”, in a letter to chancellor Sajid Javid. 

The letter, which includes signatures from 11 fashion retailers, notes that a no-deal Brexit would put “considerable strain” on retailers in the UK, and calls for “reform of the broken business rates system [to be] front and centre” of the prime minister’s intended economic package to boost business and investment. 

As one of the highest commercial property taxes in the world, signatories claimed it “is damaging the country’s competitiveness internationally”.  

The fashion retailer signatories comprise Ann Summers, Debenhams, Deichmann Shoes UK, Fenwick, Harrods, John Lewis Partnership, Marks & Spencer, New Look, Primark, Rigby & Peller and River Island. The British Retail Consortium (BRC) and British Independent Retailers Association (Bira) also signed the letter. 

The retail industry accounts for 5% of the UK economy yet currently pays 10% of all business taxes and 25% of business rates. 

As the industry undergoes significant transformation and adapts to changing consumer behaviour, the signatories argued that “significant headwinds, including an ever-rising cumulative cost burden from public policy initiatives…impact our ability to respond and invest.”

Four “fixes” were proposed: 

  • A freeze on the business rates multiplier “to stop yet another tax rise and to aid our investment in the economy and business planning.”
  • Centrally funding upwards transitional relief “to overturn the unfairness whereby businesses in the Midlands and North of England pay an artificially high rates bill in order to fund staggered rate bill increases for those in London and the South East who should be paying more, and to allow market forces to operate as intended”.
  • Introducing an Improvement Relief for rate payers “to tackle the disincentive to businesses that want to invest in our properties but are penalised with higher business rates under the current system”.
  • Ensuring that the Valuation Office Agency is fully resourced to do its job  “to tackle the 16,000 unresolved appeals that date back as far as 2010 and almost 18,000 from 2017 and a system which means many of us have not been able to lodge an appeal to correct the amounts we owe.”

BRC chief executive of the BRC Helen Dickinson said: “These four fixes would be an important step to reform the broken business rates system which holds back investment, threatens jobs and harms our high streets. The new government has an opportunity to unlock the full potential of retail in the UK, and the prime minister’s economic package provides a means to do so.

“The fact that more than 50 retail CEOs have come together on this issue should send a powerful message to the government.”

Clive Lewis, chairman of River Island added: “We welcome the BRC proposals, which offer short-term solutions that can be introduced quickly and will have immediate benefits to the struggling retail sector.  In particular, the removal of downwards transition will allow all retail businesses to pay a tax which more accurately reflects the value of their properties.  The burden that rates places on all high street businesses not only stifle growth but is a major contributor to the closure of stores and the resulting decline in towns across the country.”

Revo, the representative body for the UK retail property sector, sent a similar letter to the chancellor earlier this month calling for an urgent review of business rates as the UK fast approaches its exit from the EU. 

 

 

 

 

 

 

Readers' comments (2)

  • In other words, keep mucking around with a tax way beyond its sell date! What a pathetic campaign.

    No! Scrap the whole ghastly mess, raise VAT and distribute funds from the centre.

    It treats on and off line sales equally and brings to a close the farcical rates industry.

    Business doesn't have a local vote so why should it directly pay local taxation?

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  • darren hoggett

    The counter argument to this article is often found in the comments section of the broadsheets:

    'Why should the tax payer subsidise a failing, dying Industry?'
    They have a point. Some of the public view physical retail, rightly or wrongly, like an 8 Track Cartridge, Betamax or Mini Disc.

    While there is little doubt that Business Rates do need reform, the reality is that in the majority of areas the positive effects for most will be limited at best, both in financial savings and time. Therefore, the Business Rates debate can be looked at as a Red Herring as it is clouding the real issue - Location.

    Retailers must look to move away from prime sites and become destination stores if the numbers are not adding up. Move.

    No Government can raise footfall as it is increasingly about convenience above all else and any additional online taxes will not change shopping habits, just get some extra cash in for the HMRC.

    The vanity has to stop and reality has to kick in. Who will learn?



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