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Plenty of problems, too few solutions

The House of Commons Treasury Committee has today published its report into the Impact of Business Rates on Business, the culmination of an inquiry that was launched in February.

The full report can be downloaded here.

The headlines have focused on the committee’s recognition that the business rates system is ‘broken’ and that the Government needs to consult quickly on potential alternative models. Behind this conclusion are familiar complaints about the overall burden, its impact on investment, the issues with reliefs and downward phasing, and the inadequacy of the appeals process.

It is refreshing to see an official report that accepts these major issues exist and are not simply figments of businesses’ imagination. It is also encouraging that the committee saw through the Government’s attempts to gloss over the manifest problems the business rates system faces. The committee agrees that the problems are there, and that they need to be addressed if the tax is to be fit for purpose in a modern economy.

But while the report is long on the problems, it is all too short on workable solutions. There are some specific recommendations in the report – such as tighter deadlines for the VOA when responding to Checks and Challenges and the need to ensure the CCA system works for firms with multiple properties – but otherwise the calls it makes are either vague aims or notable by their absence.

As ever, devising a solution that doesn’t upset the apple cart too much is proving very tricky indeed, and as a result the committee has chosen to sidestep some issues entirely, calling for change but not indicating what form this might or should take.

In truth, it is only sizeable reductions in rates bills – bringing the UK into line with other OECD countries – coupled with radical administrative reforms, that will genuinely help struggling firms. Whether there is the political will to make this happen is at best questionable.

We are hopeful that the timing of the release of this report will be propitious and that election manifestos will contain positive proposals for fundamental reform.

We at Gerald Eve contributed significantly to this inquiry – through written submissions, advice to clients and an appearance before the committee by our own Jerry Schurder – and will continue to do so with any future parliamentary activity in this area. If admitting there is a problem is the first step to finding a solution, then this report may just mark the point that genuine reform began.

If you have any questions about the report, or want to understand more about the conclusions and recommendations it makes and the impact on your business, then please do not hesitate to get in touch.

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