As news comes of another high street chain entering administration, the British Retail Consortium (BRC) has warned that the backlog in business rates appeals could put more store groups out of business.
So far, there is a backlog of almost 250,000 business rates appeals at HM Revenue & Customs’ Valuation Office and many retailers are going to the wall before finding out whether or not they have been overcharged.
The backlog is causing huge cash flow problems for these retailers, which has the knock on effect of smaller firms not having the funds to mount an appeal if a decision goes against them.
According to the BRC, businesses have been hit by an additional £500m rates bill over the past two years, while the 2.6 per cent planned increase in April will cost them a further £175m.
Retailers who operate from physical premises also say that their rates are a serious threat to their business, as they have to compete against internet retailers, which are not hit by the tax.
CVS, an agency that helps firms with appeals has said that the backlog is now “weakening the financial health of a large number of businesses” and is calling for urgent action to clear the backlog.
In addition, in its Fair Rates for Retail campaign, both the BRC and Retail Week are lobbying the Government to freeze business rates this year and switch the calculation from the retail prices index (RPI) to the consumer prices index (CPI).
While the TaxPayers’ Alliance in association with the BRC has also called on the Government to scrap the proposed increase in business rates due to come in April.
Rob Chedzoy specialises within providing tax planning advice, support and guidance to owner-managed businesses.