Business Rates - Fair or Unfair
Discussion
singlecoil said:
NDA said:
Meanwhile, in other news, the British Retail Consortium warned that business rates could cause 80,000 shops to close in 2017. Appeals over business rates are now running at almost 500 per day....
Is it possible they're not fair?
I trust the appeals process is fair, and if it is then the appeals will be successful. Meanwhile, in other news, a trade body lobbied in support of its members' interests.Is it possible they're not fair?
I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
foliedouce said:
I haven't read the last 8 pages, but in short we're facing large rates increases across our 3 UK offices, in addition to that, our biggest client (the NHS) is cash strapped and has been playing hardball on pricing with eAuctions / race to the bottom etc, and we've taken a 15% hit on import prices due to Brexit, plus increased costs in autoenrollment, apprentership levy etc
None of those things are terminal, but they all add up and I can see how to some businesses this could be the straw that breaks the camel's back.
My local town has a variety of independent shops, 3 of which are now closing due to the new business rates. They were run by families that had other forms of income so they weren't businesses in the way singlecoil describes, but they were still adding a lot of value to the local area. The new rates means it's just not worth their while getting out of bed anymore, a real shame I'd say.
You first paragraph shows how, when a business finds rates to be a big problem, there are other problems too. It's the combination that's the problem, not just the rates.None of those things are terminal, but they all add up and I can see how to some businesses this could be the straw that breaks the camel's back.
My local town has a variety of independent shops, 3 of which are now closing due to the new business rates. They were run by families that had other forms of income so they weren't businesses in the way singlecoil describes, but they were still adding a lot of value to the local area. The new rates means it's just not worth their while getting out of bed anymore, a real shame I'd say.
Your third paragraph doesn't give enough detail. If these are buildings that the families own anyway, then they will still be paying rates on them. If not, then they would have been paying rent. It's likely that the real problem was the rent (as rates after all are based on rental value).
surveyor said:
I'm not convinced that it is fair anymore. The rules are slowly being stacked in the VOA favour.
I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
It certainly is a big increase. What are they turning over (just to give some perspective)?I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
singlecoil said:
surveyor said:
I'm not convinced that it is fair anymore. The rules are slowly being stacked in the VOA favour.
I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
It certainly is a big increase. What are they turning over (just to give some perspective)?I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
Lot of extra books to be sold to make that up...
surveyor said:
singlecoil said:
surveyor said:
I'm not convinced that it is fair anymore. The rules are slowly being stacked in the VOA favour.
I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
It certainly is a big increase. What are they turning over (just to give some perspective)?I cam across a tiny bookshop in London West End last week. RV is going from £43k to over £77k. That is a big headline increase, which may or may not be blunted with transition.
Lot of extra books to be sold to make that up...
Why the fixation on the company's turnover? Why is that actually relevant in terms of rates? If your turnover and profitability increases whilst you remain in the same premises you are taxed accordingly via the normal means. Its of no concern to the rates people. I think your argument is that if a company can afford it then they should automatically stop complaining and pay it? Why? My business could easily occupy a roadside glass fronted unit attracting 30k in rates. I could afford it but why bother? At the moment the money I would waste on business rates gets ploughed back into the business. The more money we have in the business the more chance we have of growing and being able to provide employment for someone.
If we move again we will continue to look at how punitive the rates are as part of that decision regardless of if we could "afford it" in our business model or not. If you have a successful business you can always afford the rates its if you can find a way to achieve the same profits in your pocket by using cheaper premises. I am fortunate in my personal situation as I previously stated and we can do just this but there are many businesses that could not operate in the same way.
One thing that even singlecoil must concede is unfair is that business rates are still chargeable on empty units. Why is this unfair? Well the system cant act on a supply and demand basis like a marketplace as the system doesnt care if there are healthy local businesses or not as they always get paid. If there was some incentive for the rates system to become more involved with businesses this would be a very positive thing. The rows of empty shops in town centres could be solved by having some relief schemes or just any kind of way of working to help business instead of just standing in the way.
Are you going to tell us if you run Daddy's company or not?
If we move again we will continue to look at how punitive the rates are as part of that decision regardless of if we could "afford it" in our business model or not. If you have a successful business you can always afford the rates its if you can find a way to achieve the same profits in your pocket by using cheaper premises. I am fortunate in my personal situation as I previously stated and we can do just this but there are many businesses that could not operate in the same way.
One thing that even singlecoil must concede is unfair is that business rates are still chargeable on empty units. Why is this unfair? Well the system cant act on a supply and demand basis like a marketplace as the system doesnt care if there are healthy local businesses or not as they always get paid. If there was some incentive for the rates system to become more involved with businesses this would be a very positive thing. The rows of empty shops in town centres could be solved by having some relief schemes or just any kind of way of working to help business instead of just standing in the way.
Are you going to tell us if you run Daddy's company or not?
fridaypassion said:
Why the fixation on the company's turnover? Why is that actually relevant in terms of rates? If your turnover and profitability increases whilst you remain in the same premises you are taxed accordingly via the normal means. Its of no concern to the rates people. I think your argument is that if a company can afford it then they should automatically stop complaining and pay it? Why? My business could easily occupy a roadside glass fronted unit attracting 30k in rates. I could afford it but why bother? At the moment the money I would waste on business rates gets ploughed back into the business. The more money we have in the business the more chance we have of growing and being able to provide employment for someone.
It's not just the turnover, it's the profitability. The relevance is the affordability of the rates (and all the other expenses). Glass fronted units attract higher rates because they attract higher rents. Why do they do that, it's because they don't need to advertise or get customers by word of mouth. People see them as they drive or walk past. It's hugely important to retail businesses and that's why they pay more rent (and rates). It's good for you if your business doesn't need that kind of market presence, but most retail BOM businesses do.
fridaypassion said:
If we move again we will continue to look at how punitive the rates are as part of that decision regardless of if we could "afford it" in our business model or not. If you have a successful business you can always afford the rates its if you can find a way to achieve the same profits in your pocket by using cheaper premises. I am fortunate in my personal situation as I previously stated and we can do just this but there are many businesses that could not operate in the same way.
As you've already pointed out your business doesn't need that kind of exposure, which as I've pointed out is good for you. Others, including myself, do. I could not consider a unit much as I would like the much lower cost.fridaypassion said:
One thing that even singlecoil must concede is unfair is that business rates are still chargeable on empty units. Why is this unfair? Well the system cant act on a supply and demand basis like a marketplace as the system doesnt care if there are healthy local businesses or not as they always get paid. If there was some incentive for the rates system to become more involved with businesses this would be a very positive thing. The rows of empty shops in town centres could be solved by having some relief schemes or just any kind of way of working to help business instead of just standing in the way.
No, I'm not going to concede that, quite the reverse. Because I want landlords to lower the rents on unattractive units until they reach market level and get rented out. Having to pay rates encourages them to do that.As I've said more than once, it's NOT rates that stop those shops being rented out, in some cases it's lack of trade, and it others it's the RENTS.
fridaypassion said:
Are you going to tell us if you run Daddy's company or not?
singlecoil said:
You are not providing enough information. What's the rent, the turnover, the G.P. the EBITDA, the staff costs? Why was the building re-assessed, was there an appeal? I need all of this stuff before I can answer your question as would anyone else (unless they were trying to make some kind of political point (and it would be a weak one without more info)).
No i am trying to challenge your view on this, not a political point The business turnover, gross profit, staff wage, rent are within normal expectations of running a small business. No holiday home in Barbados, no staff working at home cleaning out your duck pond, you have not got a Bentley down as a company vehicle. You are competitive in your field, not looking to sell your business, you are happy ( as most are ) to be your own boss and give solid employment for others.
You don't need to forensically look at their accounts to see that they have got to find £7,200 and this can be in some cases the straw that breaks the camel's back.
chippy348 said:
No i am trying to challenge your view on this, not a political point
The business turnover, gross profit, staff wage, rent are within normal expectations of running a small business. No holiday home in Barbados, no staff working at home cleaning out your duck pond, you have not got a Bentley down as a company vehicle. You are competitive in your field, not looking to sell your business, you are happy ( as most are ) to be your own boss and give solid employment for others.
You don't need to forensically look at their accounts to see that they have got to find £7,200 and this can be in some cases the straw that breaks the camel's back.
If you want me to comment on the affordability of the rates then I am going to need more detail than you have provided. Normal doesn't mean anything, a fact which I know better than most. There are a wide range of normal businesses. The business turnover, gross profit, staff wage, rent are within normal expectations of running a small business. No holiday home in Barbados, no staff working at home cleaning out your duck pond, you have not got a Bentley down as a company vehicle. You are competitive in your field, not looking to sell your business, you are happy ( as most are ) to be your own boss and give solid employment for others.
You don't need to forensically look at their accounts to see that they have got to find £7,200 and this can be in some cases the straw that breaks the camel's back.
The fact that they have to find it if they want to stay in business on that site I will agree to, but what actually matters is whether they can afford it or not. I don't like paying it any more than anyone else does, but if I couldn't afford it then I would have other bigger problems.
I know you don't like providing figures, so I will have to do it for you. Let's take a typical pub, wet trade only to keep it simple.
Turnover £180,000, cost of sales £90K, rent £30,000, rates £7,500. Owner/manager's wages £30K, wife £10K, part timer £10K. How big a factor is that £7,500 in all this?
singlecoil said:
I daresay the reasoning is that if the company can't afford the tax on their premises then they shouldn't be holding those premises. They should let them go and give someone else a chance (especially applies to the high street).
I dont think companies hogging high street premises is the biggest problem right now.You seem to have a very black or white take on this and to extent your stance has merit, but so does the arguement that such a blunt instrument as bis rates discourages entrepreneurs from speculating where a more profit based approach would encourage them. Not every business hits the ground running and never suffers setbacks.
Personally I wonder if banging the VAT rate up and cutting many other taxes would work better - as someone who charges/pays VAT its something you pay lots when you do well and little when you don't bank much in a quarter - its very manageable. Its also ridiculously easy for hmrc, and less civil servants having to make decisions can only be good for everyone.
singlecoil said:
chippy348 said:
No i am trying to challenge your view on this, not a political point
The business turnover, gross profit, staff wage, rent are within normal expectations of running a small business. No holiday home in Barbados, no staff working at home cleaning out your duck pond, you have not got a Bentley down as a company vehicle. You are competitive in your field, not looking to sell your business, you are happy ( as most are ) to be your own boss and give solid employment for others.
You don't need to forensically look at their accounts to see that they have got to find £7,200 and this can be in some cases the straw that breaks the camel's back.
If you want me to comment on the affordability of the rates then I am going to need more detail than you have provided. Normal doesn't mean anything, a fact which I know better than most. There are a wide range of normal businesses. The business turnover, gross profit, staff wage, rent are within normal expectations of running a small business. No holiday home in Barbados, no staff working at home cleaning out your duck pond, you have not got a Bentley down as a company vehicle. You are competitive in your field, not looking to sell your business, you are happy ( as most are ) to be your own boss and give solid employment for others.
You don't need to forensically look at their accounts to see that they have got to find £7,200 and this can be in some cases the straw that breaks the camel's back.
The fact that they have to find it if they want to stay in business on that site I will agree to, but what actually matters is whether they can afford it or not. I don't like paying it any more than anyone else does, but if I couldn't afford it then I would have other bigger problems.
I know you don't like providing figures, so I will have to do it for you. Let's take a typical pub, wet trade only to keep it simple.
Turnover £180,000, cost of sales £90K, rent £30,000, rates £7,500. Owner/manager's wages £30K, wife £10K, part timer £10K. How big a factor is that £7,500 in all this?
Where will the extra £7.5k come from?
singlecoil said:
I know you don't like providing figures, so I will have to do it for you. Let's take a typical pub, wet trade only to keep it simple.
Turnover £180,000, cost of sales £90K, rent £30,000, rates £7,500. Owner/manager's wages £30K, wife £10K, part timer £10K. How big a factor is that £7,500 in all this?
Where's the VAT?Turnover £180,000, cost of sales £90K, rent £30,000, rates £7,500. Owner/manager's wages £30K, wife £10K, part timer £10K. How big a factor is that £7,500 in all this?
hairyben said:
You seem to have a very black or white take on this and to extent your stance has merit, but so does the argument that such a blunt instrument as bis rates discourages entrepreneurs from speculating where a more profit based approach would encourage them. Not every business hits the ground running and never suffers setbacks.
I agree. And as long as a way could be found of stopping companies using 'creative' accounting or off-shore HQs to avoid paying tax then I think that could work very well. Another way that could work is the business applies for a rebate with properly audited books on the rates they have already paid on the basis of having not made a profit. There would still be a problem with what counts as profit, an owner might choose to take all the money out of the business with wages instead of company profits, but if a way could be found then I expect the HMRC would be all for it.surveyor said:
Let's put this in terms of Reval shall we. Rates have now doubled to £15,000. There is a right of appeal (probably). But it will take 2 years to get to it...
Where will the extra £7.5k come from?
Out of the business, where else would it come from? However, this is actually a real business and those are the current rates.Where will the extra £7.5k come from?
Seventy said:
Where's the VAT?
I should have said, figures are net of VAT.singlecoil said:
surveyor said:
Let's put this in terms of Reval shall we. Rates have now doubled to £15,000. There is a right of appeal (probably). But it will take 2 years to get to it...
Where will the extra £7.5k come from?
Out of the business, where else would it come from? However, this is actually a real business and those are the current rates.Where will the extra £7.5k come from?
Seventy said:
Where's the VAT?
I should have said, figures are net of VAT.By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
surveyor said:
What's the reval RV?
By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
But remember that the owner has a choice of taking the money the business makes as dividend on the profits or as wages...By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
singlecoil said:
surveyor said:
What's the reval RV?
By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
But remember that the owner has a choice of taking the money the business makes as dividend on the profits or as wages...By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
surveyor said:
singlecoil said:
surveyor said:
What's the reval RV?
By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
But remember that the owner has a choice of taking the money the business makes as dividend on the profits or as wages...By my calculating the business seems to be making a profit of £2,5k. If those rates double then the extra is gonna end up coming out of the owners wages...
If they were to double it again, it would be even more. I guess you will get to your point soon...
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