Trade bodies call for fairer business rates

10-Jul-2016 - Last updated on 11-Jul-2016 at 09:47 GMT

As a Government business rates consultation comes to a close, trade bodies have called for reforms to make the system fairer for licensees, and support a move to more frequent revaluations of rates.

The British Beer & Pub Association (BBPA) and Association of Licensed Multiple Retailers (ALMR) have welcomed the Government’s objective of moving to at least a three-yearly revaluation, in responses to a consultation that ended on Friday.

The aim was set out in this year’s Budget and responses from the industry will be analysed.

Self-assessment model

To help make a system of frequent revaluations work better for both pubs and the Government, the BBPA has set out proposals for a new self-assessment model.

This would be based broadly on the current methodology, but with greater flexibility, to help avoid additional costs and administrative burdens on the pub sector.

Business rates already make up about 10% of pub operating costs. Currently, business rates are calculated based on an outlet’s fair maintainable turnover (FMT), the level of revenue that a reasonably efficient operator would be able to generate in the premises.

Successful businesses penalised

In practice, rates can be based on actual turnover, and this can penalise successful businesses performing beyond expectations. Reforms to the business rates system should focus on FMT, while increased frequency of revaluations would ensure rates are more closely aligned with current market conditions.

The BBPA’s proposed self-assessment model would give licensees greater insight into the process, and added transparency. This would also allow for the Government’s aim of more frequent revaluations without significant cost, to either Government or businesses.

The BBPA is also calling for a light-touch approach when it comes to compliance and enforcement of any new scheme; one that does not penalise genuine mistakes or self-assessments put forward in good faith but are subsequently disputed.

Fairness in frequency

Brigid Simmonds, BBPA chief executive, said: “We have always believed that the pub sector needs more frequent rates revaluations, which is essential in ensuring that the business rates burden is spread more fairly and better reflects the current market.

“The self-assessment approach that we are putting forward offers both pubs and the Government a way of achieving this in an efficient way that would be good for both.”

The BBPA’s submission, ‘Business Rates – delivering more frequent revaluations’, can be read on the BBPA website.

A need for clarity

The ALMR has also supported the introduction of self-assessment, and continued a push for root and branch reform for business rates in its submission to the Government’s consultation.

ALMR chief executive Kate Nicholls said: “The Government’s proposals for self-assessment and a formula-based approach should provide hospitality businesses with some degree of clarity and a chance to make a saving.

“These are, along with wider root and branch reform, proposals that the ALMR has been pushing for solidly for a number of years. There is a chance that amendments may be needed to the way in which property is valued, as well as its frequency, and the ALMR’s submission has put forward proposals to deliver this.

“A more streamlined system can ensure that valuations are set correctly in the first instance, eliminating the need for costly and time-consuming appeals, and freeing up cash for retailers. The shift to a three-year cycle, allowing for more frequent revaluations, will also reduce time between valuation and billing.”