The news that the Chancellor ‘is said to have requested feedback from industry experts on whether luxury shops, offices and other large buildings should be subject to a higher business rate’ should be very worrying for businesses across the UK.
There is of course a wide range of different businesses within the stated sectors and the Business Rates system has no way of separating ‘luxury shops’ from any other shop, given the system values properties as they stand, empty to let, not the businesses who occupy them. Targeting these three brackets or any other within the system will of course hit some of the intended targets, but collateral damage would be huge, hitting many many other unintended businesses who simply could not afford the additional costs, at this challenging time.
As an example the Chancellor may wish to consider targeting warehousing, with the growth in e-commerce / online sales in particular benefitting from the last 6 months. However, many businesses who occupy warehouse space form part of the production sector, heavily impacted adversely by the pandemic. The Business Rates system is not designed to differentiate between the two, so could not easily be used to levy higher taxes on one sector separating it from the other.
I am sure we all understand the need for the Chancellor to try to recover some of the costs of the last 6 months, however the Business Rates system cannot be the answer, unless he is considering some significant changes to the system, moving to take into account the actual businesses, in addition to simply the value of the vacant properties, which is already accounted for in the level of the Rateable Values, upon which Business Rates are levied.