GOVERNMENT RELEASES GUIDANCE ON BUSINESS RATES RETAIL RELIEF

Gerald Eve’s Jerry Schurder gives his response:

The Government has today released guidance on how the new £1,000 business rates retail relief for small shops, as announced in December’s Autumn Statement, should be applied by local authorities. The full document is available here.

Responding to the guidance on the relief – which provides a discount of up to £1,000 in 2014/15 and 2015/16 to most occupied town centre properties with a rateable value of £50,000 or less – Jerry Schurder, head of rating at Gerald Eve, said:

“This guidance is welcome, but does add to the administrative burden of both local authorities and businesses, somewhat diminishing the benefits of the relief.

“Firstly, councils need to make judgements on exactly which properties are included within the relief. The guidance outlines which property uses qualify, but a building described as a ‘shop and premises’ on the rating list could be occupied by a greengrocer – which receives the relief – or an estate agent, which does not.

“With over 380,000 categorised by the Valuation Office Agency as shops, this puts a huge burden on local authorities to decide exactly which properties and businesses qualify, and within a very tight timetable, with the 2014/15 rates bills due to be sent out in the next few weeks.

“Secondly, there is the question of EU state aid rules, which limits any business to €200,000 of aid over a rolling three year period. This means all businesses have to investigate whether any part of their operations throughout Europe have received aid and as a result will breach this threshold, and there is an extra layer of bureaucracy for multi-site operators to opt-out of the discount on some premises while maintaining it for others.

“Allied to the process for moving from ten to 12 payment instalments, with businesses having to apply to each relevant council for the right to do so, this guidance creates yet more administrative hurdles and highlights the complexity of the rating system.

“In the same Autumn Statement the Government promised to bring forward proposals to reform and simplify of the administration of business rates, so it is perverse to bring in measures that actually make it more complex with additional red tape for businesses to overcome. It also fails to address the wider issue of the need for comprehensive review, rather than piecemeal reliefs and benefits, to both make the system less costly and more flexible, adapting to changing economic conditions.”