Business rates appeals system could cost SMEs £700m

26 Nov 2016

A consortium of lobby groups representing SMEs, retailers and pubs have criticised the proposed new business rates appeal system, being introduced in April 2017, saying a provision in the appeal regime, known as Check, Challenge, Appeal, could cost businesses £700m in overpayments over a five-year ratings cycle.

The “reasonable professional judgment” provision would mean ratepayers will not be able to argue against a rates bill if its margin of error was inside 15 per cent.

Research by property consultancy Daniel Watney and Blackstock Consulting shows some firms could be pushed above the exemption criteria by a 15 per cent margin, meaning they would have to pay for the first time.

The groups called for the Government to revert to an earlier system to try to cap the increase that businesses will have next year at 12.5 per cent.

Martin McTague of the Federation of Small Businesses, said: “This research shows that businesses that are already struggling could be pushed into insolvency, with smaller firms particularly at risk.”

Adding to this, Brigid Simmonds of the British Beer and Pub Association, said: “For a business struggling to make ends meet, 15 per cent could make a real difference and, should their appeal be successful, they should receive the full refund.”

In light of the forthcoming Autumn Statement on Wednesday, Craig Allen, Founder and Director of specialist recruiter to the hospitality sector said today in an interview with eatoutmagazine.co.uk: “Phillip Hammond should prioritise the pub and restaurant sectors in his Autumn Statement as this is the fourth largest employer in the UK and one of our fastest growing sectors."

Statistics from the British Hospitality Association show that hospitality businesses employ 10 per cent of the UK work force and are the sixth largest contributor to export earnings.

“A weaker pound has strengthened tourism and this is good for hospitality. But recruitment is still a challenge, and may become worse depending on the terms of Brexit. Plus employers are facing higher costs because of the increase to the minimum wage and inflation and the Business Rate reviews. The Chancellor needs to do more to help this vital industry and quickly to boost confidence.

“High rates favour large national chains and make it harder for innovative independent bars and restaurants to compete. The result is that every high street looks the same, and are much less appealing for the customer, which eventually leads to a reduction in footfall for everyone.”

At Beavis Morgan, we have extensive experience of working with clients in the hospitality sector and our professionals are acknowledged experts in issues affecting pubs, bars and restaurants.
Contact Matthew Burge or your usual Beavis Morgan Partner for further information about how we can assist you and your hospitality business.

To find out more about the proposed new business rates appeal system visit: British Hospitality Association - Business Rates 2017