Trade industry groups call for overhaul of business rates system

By Michelle Perrett

- Last updated on GMT

Change needed: three of the trade associations have urged the Government to reform the business rates system (image: Getty/deepblue4you)
Change needed: three of the trade associations have urged the Government to reform the business rates system (image: Getty/deepblue4you)

Related tags: Business rates, Legislation, Property law, British beer & pub association, ukhospitality, British institute of innkeeping

Leading trade groups – the British Beer & Pub Association (BBPA), UKHospitality (UKH) and the British Institute of Innkeeping (BII) – have all called for business rates reform.

The calls from the trade organisations come as they are set to respond to HM Treasury’s consultation on business rates revaluations, and proposals to revaluate them every three years. 

The BBPA has called for a ‘radical’ overhaul of the rates system after it revealed that pubs overpay their fair share of business rates by £570m a year. 

According to the trade association, the pub sector in the UK pays 2.5% of all business rates, despite accounting for just 0.5% of rateable turnover. 

“As things stand, pubs will overpay on Business Rates to the tune of £570m a year. The bill for this will come through the post once the current relief on Business Rates ends in March 2022,” a BBPA spokesman said.    

Fundamentally wrong

“Pubs overpaying on their business rates is fundamentally wrong. Especially as they were one of the most affected sectors by Covid and lockdowns. The Government should be supporting pubs’ recovery, not punishing them.” 

Meanwhile, UKH and the BII have welcomed the opportunity to comment on the Government’s Business Rates Revaluations Consultation and support the proposal to increase the frequency of evaluations to three-yearly revaluations. 

However the two organisations said this cannot come at the cost of extra reporting, restrictions on appeals and penalties. 

The two organisations said that the hospitality sector overpays by 300% relative to its turnover in the current system, following the pandemic this already unfair system will put further pressures on heavily indebted businesses as they begin to rebuild and repair balance sheets. 

Unfit for purpose

In a joint statement the trade bodies said: “The current business rates system has long been unfit for purpose and puts an unfair burden on pub and hospitality businesses. It’s extremely encouraging the Government is proposing to increase the frequency of revaluations, something for which we have been calling for some time. However, the proposals are severely undermined by administrative burdens, limits on appeals and penalties.

“It’s vital the Government reforms match the severity of this issue. This proposal is helpful but does not redress the wide-ranging issues with the current system that will severely hamper the sector’s ability to recover from the pandemic if not addressed. We urge the Government to work closely with the sector to implement wide-ranging reform that will empower hospitality businesses, to rebuild and repair revenues, create jobs and be at the forefront of the economic recovery.” 

UKH and the BII have raised concern about further proposals: 

  • Businesses are not asked for more information than they currently are at revaluation: the need to report amendments mid-list is burdensome and will actively discourage investment in the sector at a critical time.

  • The move to more frequent revaluations be considered as part of the broader review of business rates – which should be designed to reduce, not increase, the burden on ratepayers.

  • The Valuation Office Agency should enhance its technological systems to facilitate data returns at valuation.

  • Businesses should not be charged for challenges, nor should there be fixed windows in which to bring a challenge.

  • The Government should consider minimising the time between the AVD and the new list to 18 months or lower.

Related topics: Legislation

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