Extended hours could lead to increased business rates

More flexible licensing hours could see a rise in business rates for licensees, says chartered surveyor LSM Partners.

The rateable value of a pub is based on trade rather than profit. If the barrelage increases on a sustained basis so could the rates bill.

LSM argues that this could mean licensees planning to reap the rewards by opening during more profitable hours could find themselves faced with another huge bill from the government.

The surveyor says that licensees need to be careful if they are planning to appeal against their new rates, which come into force on April 1. The Valuation Office Agency (VOA) could consider taking into account the fact that pubs could be making more money under the new licensing regime. The result would be another price hike.

David Hudson, business rates director at LSM Partners, said: "It is not clear cut, but it is certainly a danger that there could be rate liability. The VOA may want to have a look at high turnover pubs, although it is unlikely to affect more rural ones. Licensees need to review their position with their professional adviser and consider whether they would like to stay open late."

However, many in the trade are arguing that it is unlikely that licensees will want to open for many extra hours and definitely not for a 24-hour period.

They also claim that flexible licensing hours will not necessarily mean an increase in trade as customers still only have a certain amount of disposable income.

The Publican's Market Report 2004 revealed that only one per cent of licensees are planning to open 24 hours all week, while two per cent are planning to open round-the-clock at weekends.

The VOA launched an initiative last year to make the ratings system more easily understandable to businesses - including pubs.