A damning inquiry into the business rates system last year, by the Treasury Select Committee, confirmed what many had already suspected was the case – that business rates have not previously been and are not currently shouldered equally by those within scope and that, for all intents and purposes, the business rates system is ‘broken’.
In response and after announcing that they would do so at Budget 2020, the government has issued a call for evidence to inform its review.
Initially, the review will address ways in which the encumbrance that businesses bear under the existing regime can be reduced, how the system can be improved and exactly what changes could be made long-term.
One such change that has been touted as a possibility, is an online sales tax which would exist alongside business rates and be levied on those online retailers in direct competition with similar suppliers on the high-street.
With the impact of the Coronavirus crisis in mind, the government are also keen to consider how rates reliefs can be simplified and targeted more effectively, how rates bills should be calculated going forward and how often revaluations should take place.
As it stands, the next revaluation will now take effect on 1 April 2023 after it was announced earlier this year that it would be pushed back.
Responses, which can be submitted online or via email, relating to the multiplier and reliefs element of the review should have been provided by 18 September, whilst responses to all other sections should be supplied by 31 October.
Preliminary conclusions are slated for the Autumn whilst final decisions are likely to be delivered in Spring 2021.
Claire Morgan, Partner at George Hay, commented: “The business rates system feels like it has rarely been out of the news in recent times; as the cost to businesses creeps up, the reality of no longer being able to trade becomes very real for some.
“Businesses across the UK want to innovate, employ more people and invest in the future of their organisation, without worrying about losing their premises. This fact is even truer now, when we think about the impact that Coronavirus has had on so many industries.
“The deferment of the next revaluation and the business rates holiday afforded to certain businesses during the pandemic are, of course, welcome shows of support. However, it remains to be seen whether this will truly be enough to give those affected the leeway necessary to turn things around.
“This latest call for evidence is an opportunity for stakeholders, whether retailers, pubs or charities, to respond and share their side of the story; we would certainly encourage those affected by the business rates system to do so.
“As always, we will be monitoring any further developments with interest.”
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