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What you need to know on the latest business rates revaluation
31/03/2017 - 12:04
The next revaluation of business rates comes into effect on April 1st. Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers (ALMR) and Ramzi Qattan, association director of consultancy at Christie & Co. tell Andrew McClean what operators can expect.
What advice on business rates would you give to operators?
KN: The ALMR’s advice to both members and non-members has been to check their draft rateable values and to challenge any errors immediately. Venues eligible for the £1,000 relief will need to get in touch with their local authorities at the earliest opportunity to ensure they receive the help they are entitled to. Venues falling outside the cap for sector-specific relief may still be entitled to relief from the Government’s £300 million discretionary fund. Businesses, particularly restaurants, should contact their local authorities and their Member of Parliament to make sure they are at the forefront of plans to distribute the relief.
RQ: Operators are not obliged to accept the results of the business rates revaluation, and should seek professional advice to Check, Challenge and Appeal any excessive increases in Rateable Value across their portfolios, particularly where resulting values are far above open market rents or those for comparative businesses.
What impact does you expect the rise to have on businesses?
KN: The sector is the only one looking at average increases in every region in England. Combined with wage increases and other increases in property costs, the increased rates bills will have a significant effect on businesses already facing tightening margins.
RQ: Clearly, there will be winners and losers when the 2017 list comes into effect. Businesses with a Rateable Value of below £12,000 will be lauding the 100% relief now available to them, whilst operators in London and other major cities are likely facing material increases.
Is the pub sector relief a real help?
KN: The sector-specific relief will be a real help to pubs but there are many venues, most notably restaurants, looking at comparably large rate increases that are not eligible for the relief. This is why the ALMR is continuing to pressure the Government to ensure that the businesses hardest hit, restaurants and clubs, are first in the queue for the discretionary relief being allocated to local authorities.
RQ: The Chancellor’s announcement of a further £1,000 relief for pub businesses, whilst welcome news, will only affect those businesses with a Rateable Value of between £12,000 and £100,000, and only for the coming year. We consider this as a gesture of acknowledgement of the importance of the role of pubs within their local communities as opposed to a serious and concerted effort to alleviate the financial strain that many pub operators will now be facing.
What is the main threat the rise poses to small businesses?
KN: Tightening margins can undermine investment and de-stabilise a business’s ability to plan for the future and invest. There is a considerable amount of uncertainty in the country at the minute as the Government works through the various implications of Brexit. Nothing derails stability like uncertainty and rising business rates costs for businesses only exacerbate this sense of instability. This is why we needed, and still need, action to address rising costs that seriously hamper a venue’s ability to invest and grow. Steps to address rising businesses rates need to form part of a package of action that reduces burdens for businesses and frees them up to develop.”
RQ: The business rate revaluation comes into affect simultaneously with a raft of additional cost pressures that operators now face, including increases in National Living Wage, Utility costs, and inflation as well as the introduction of the Apprenticeship Levy, and further uncertainty over the implications of Brexit. Combined, these factors will place significant pressure on the pub and restaurant sector, and we foresee a number of currently marginal businesses falling into distress, and possibly disappearing altogether, as a result.