BUSINESS RATES DEFERMENT SCHEME SLAMMED AS ‘LAST THING BUSINESSES WANTED’

Figures suggest less than 10% of businesses will participate in rates deferment scheme

The repeat of the business rates deferment scheme, announced by Chancellor George Osborne MP during today’s Autumn Statement, has been slammed as ‘the last thing that businesses wanted’ by a leading Birmingham-based rating expert.

Jerry Schurder, head of rating at property consultants Gerald Eve, outlined the problems faced by businesses participating in the initial protocol, and how the Chancellor’s announcement flew in the face of industry requests not to repeat the scheme but instead either freeze business rates or introduce an increase below the 5.6% September RPI limit.

Jerry Schurder comments: “The initial business rates deferment proposals, first introduced in 2009/10, were an unmitigated bureaucratic nightmare and it was memories of this that led businesses to seek lower or zero rates rises rather than a repeat of the scheme.

“There is very little interest in businesses to participate in the new scheme, which is something the Government seems to be banking on. The figures supporting the statement show that the repeated scheme is expected to cost only £85 million in 2012/13; given that the rates increase is set to generate an additional £1.35 billion in revenues, it is clear the Government is expecting only 10% of companies to participate.

“Businesses had made it abundantly clear that the last thing they wanted was a repeat of the rates deferment scheme, but the Chancellor seems to be pinning his hopes on companies not wishing to put themselves through the hurdles of the scheme given the debacles of their previous experiences.”

The rates deferment scheme, initially instigated during 2009/10 and repeated by the Chancellor in today’s Autumn Statement, allows businesses to defer 60% of the inflation-lined increase in rates due next year and repay the amounts over the following two years.

Jerry Schurder continues: “The initial scheme was a calamity from day one. Firstly, in the worst possible example of red tape madness, each of the country’s 1.8 million businesses had to complete application forms seeking deferment, but the principal problem still being experienced today is that most local authorities simply failed to accurately calculate liability, issuing erroneous demands.

“Tens of thousands of businesses were incorrectly summonsed for not paying enough in rates, while hidden costs in managing the deferment scheme greatly outweighed the modest cash-flow benefits. I, like many businesses, have zero confidence that it will be managed any better next year.

“It is little surprise that the vast majority of businesses have no interest whatsoever in participating in the scheme, which is, sadly, something that the Chancellor seems to be relying on.