Some of the UK’s retail mega-giants joining forces and issuing a plea to implement an online sales tax (OST), is the biggest call for business rates reform we’ve seen to date.
A responsible OST could be a fair way to level the playing field between shop workers and online businesses if applied the way the Retail Jobs Alliance (RJA) foresee it to. The idea is that proceeds from the OST are then used to lower the costs of business rates for bricks and mortar stores.
It could provide a needed liferaft to the British hightsreet, who haven't had a very good run of it over the past few years. At CPA we’ve helped a huge amount of retailers who’ve had difficulties paying their overheads while revenue has been down due to the pandemic.
Rishi Sunak has commented on the calls for a significant shake-up to the system, promising changes in the winter. It’s a disheartening response, considering the feeble changes that have been made to business rates structuring in previous budget statements. The long wait for winter may also prove too much for some retailers, as business rates bills continue to rise.
But it’s not just the retail industry that have been crying out for change. Two months ago, the British Bar and Pubs Association (BBPA) made their case for business rates reform, and rightly so! The hospitality industry makes up for around 2.5% of business rates paid in the UK while representing 0.5% of rateable turnover. This is another industry left battered by the pandemic, that is paying comparably disproportionate amounts of money to operate.
It’s no surprise that the likes of the RJA and the BBPA have made these calls during spring, as annual business rates bills are delivered to businesses across the UK. They include significant changes for hospitality, leisure and retail industries, as relief they’ve received through the pandemic begins to taper. What used to be a 50% discount on business rates is now just 33%.
The relief scheme saved many of our pubs, shops and facilities from liquidation, but many other businesses were left out. Those that didn’t quite fit the remit or those that supply the retail, leisure and hospitality trade were also crippled by the pandemic. They weren't entitled to any financial help from the government for nearly three years.
The Covid Additional Relief Fund set out to change that. However, it’s no secret that its, rollout was archaic, to say the least. Most of those that were entitled, weren’t even aware of it. It was offered on a discretionary basis at a council level, making the fund more of a postcode lottery than anything. Its deadline is also incredibly tight, making it imperative for a successful appeal, that evidence is presented promptly, and to a professional standard.
It’s obvious that business rates need a real shift in focus, in order to work for everyone. But whether they’ll get it soon remains to be known.