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Slash Business Rates Before We Shut Up Shop, Say Retailers

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Guardian 9/12/13

'Grocery giants and independents rarely agree on anything, but when it comes to business rates they speak with a single voice: they say it's an unfair tax on high street operators and a major overhaul is long overdue.Simon Thomas of Moorfields Corporate Recovery, the administrator for doomed video chain Blockbuster, said: "If the chancellor continues to delay the review of business rates until 2017 [when it is due] it will be too much for the sector to bear. We are confident that by stimulating retail activity across the country the exchequer would increase the direct and indirect tax take."

Blockbuster was felled by online competition, but it complained that business rates amounted to 10% of its turnover.

Thomas added that the tax break for retailers occupying empty premises could also have unfortunate results: "It is open to a lot of abuse. There are lots of landlords with empty properties and who are trying to avoid paying rates, and there is an industry out there trying to find ways to do that."

Landlords could, he said, drop rents for retailers that hop between properties to qualify for the reduction, while stalwarts of the local high street suffer.

The key problem is that business rates are normally set every five years, using a formula based on the premises' rental value – but the last review was in 2010 and used figures from early 2008.

Since then, rents outside London have plunged, as closures swept Britain's high streets. But the government has delayed the 2015 review for two years, leaving struggling shops paying rates based on boom-time rents – and their online rivals paying relatively little because they don't have a high street presence.

What retailers really want is a new tax on shops' revenues or a system of yearly revaluations. Either would link rates more closely to the business's fortunes.

Britain relies on business rates more than any other country in the European Union. They are equivalent to 1.6% of output in the UK, compared with 0.3% in Germany and 0.5% in France.

BDO's Rose said overseas retailers might think twice about opening in the UK when they could opt for Germany. Julian Dunkerton, chief executive of fashion business SuperGroup, has said high rates would make him open shops overseas instead of in Britain.

Shop owner Paul Turner-Mitchell, who contributed to the recent Grimsey Report on the high street, said: "We are moving new shops and potential employment overseas, yet the chancellor says we have the most competitive taxation in the world."

The chancellor's problem is that business rates are a big source of revenue, bringing in £26.5bn last year. But retailers argue that cutting the overall take from business rates would stem the tide of closures and encourage expansion, so the government would bring in more corporation tax. It would also, they argue, boost employment, taking people off benefits and getting them paying tax. And that, they say, might just slow the attrition on the high streets too.'

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I worked out that at least with 'big box' stores, putting solar panels on the roofs would generate subsidies roughly equal to business rate payments per m2. Could be one way of mitigating the costs, if youre a big store at least.

Or is there some kind of rentier caveat created by the government, that they have to touch soil or something?

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Drop rents.... That would imply the building isn't worth the paper it's written on.....

Hence the delay in revaluation exercise till 2017.

Keep on kicking the can down the road...

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Drop rents.... That would imply the building isn't worth the paper it's written on.....

Which way is it? There seems to be a backlog in appeals which I think means they applicant thinks the rateable value should be less.

Or are they postponing because RV's have gone up, and bills will jump. The RV's did seem to go up a lot between the 2005 and 2010 atleast here in Kent.

You can search here http://www.2010.voa.gov.uk/rli/

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Councs will just kill off small shops anyhow with car park charges, yellow lines, one way systems, etc.

Indeed I suspect a lot of the concern about "saving the high street" is really the council worrying about seeing their revenue streams dry up.

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They're money for old rope in terms of the councils providing little in the way of services in return for the money.

However, although I'm always keen to deprive councils of income, any concession this way is just further encouragement of zombie businesses. I also think some sort of perverse scenario where business space is cheaper per sqft on the high st than out on an industrial estate isn't outside the realms of possibility.

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They're money for old rope in terms of the councils providing little in the way of services in return for the money.

However, although I'm always keen to deprive councils of income, any concession this way is just further encouragement of zombie businesses. I also think some sort of perverse scenario where business space is cheaper per sqft on the high st than out on an industrial estate isn't outside the realms of possibility.

I don't think all such businesses are zombie ones. You can have thriving shops and then the council changes the road layout or prohibits parking nearby and a shop can go from thriving to dead.

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BDO's Rose said overseas retailers might think twice about opening in the UK when they could opt for Germany. Julian Dunkerton, chief executive of fashion business SuperGroup, has said high rates would make him open shops overseas instead of in Britain.

Empty threats just like the bankers' threats to move overseas.

Go on then - move overseas. Maybe then the rates would drop.

Likely then some more German shops etc would open up in the UK and offer value - like the equivalents of Lidl, Aldi etc.

Move overseas and do it soon.

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Empty threats just like the bankers' threats to move overseas.

Go on then - move overseas. Maybe then the rates would drop.

Likely then some more German shops etc would open up in the UK and offer value - like the equivalents of Lidl, Aldi etc.

Move overseas and do it soon.

I think you've got the wrong end of the stick there with Superdry. I'm also not sure there's a queue of continental retailers waiting in the wings for our indigenous ones to emigrate TBH.

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I think you've got the wrong end of the stick there with Superdry. I'm also not sure there's a queue of continental retailers waiting in the wings for our indigenous ones to emigrate TBH.

I don't think I have.

Superdry are unlikely to stop expanding (if that's their objective) because their product and shops currently seem quite popular as well as reasonably priced and fashionable especially compared to the same old stuff from a lot of the established UK retailers which Superdry seem to well outshine (outshining the majority isn't that difficult these days) - so in that respect it's an empty threat and a cartel like threat (all threat together - a bit like the unions) trying to increase margins. In some ways it's fair enough I suppose but it's important to see it for what it is - but if they think their business would do better elsewhere then they should go for it.

There may not be a queue of overseas retailers right now but if enough UK retailers moved overseas like they're threatening (and maybe some of the threat loving bankers as well) and rates went down for sure some would move in to fill the supply gap to compete - some of the UK retailers are still displaying stuff on their racks that look at least about 4 or 5 years old.

That's not to say that rates aren't too high (like parking charges and residential council tax etc etc).

Instead of just threatening they should all go for it.

Edited by billybong

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