Danny Alexander, Chief Secretary to the Treasury has announced a review of the business rates system and inviting contributions from all parties. Quarterbridge has made representations on behalf of market traders, stallholders and owners. We’ve highlighted inconsistencies in application and how recent changes have created an unnecessary administrative burden on councils.
When the rateable value is calculated it should, theoretically reflect periodic occupation and varying trader attendance from week to week.
The existing system of business rates is based on the estimated rental value of comparable premises which are occupied with exclusive possession by a tenant for 365 days per year. This rarely applies to markets – particularly open markets which don’t occupy a building and for which comparable evidence of rental value can rarely be found. When the rateable value is calculated it should, theoretically reflect periodic occupation and varying trader attendance from week to week. But in reality this does not happen and the market owner is left with a charge to recover through the rents he charges but which has very little relation to the true value of the space.
The administration is unnecessarily complex and in any event often worthless at collecting tax
The system is particularly inappropriate for market halls containing fixed stalls. Stallholders do enjoy ‘exclusive possession’ of their stalls 365 days per year but in recent years the Valuation Office has moved away from a ‘single assessment’ of a whole market hall to individual assessments of stalls within it. This is a retrograde step. Previously it was easy for management to query the assessment and apportion it back to stallholders pro rata to the space they occupy within the building. Nowadays the system requires the individual measurement of each stall and the creation of dozens of new rating accounts for a council to administer. There are also inconsistencies in application between regional valuation offices – sometimes the management facilities are charged in addition and sometimes they are apportioned into the stall assessments. The administration is unnecessarily complex and in any event often worthless at collecting tax because individual assessments fall into the band qualifying for small business rates relief.
Under the individual assessment scheme stallholders have to submit individual applications for small business rates relief
Under the individual assessment scheme stallholders have to submit individual applications for small business rates relief which creates yet another burden of administration for their local council. In practice many managers make the applications for relief on behalf of their stallholders to keep total occupational costs down and often end up supplying the VO with floor areas for the calculations. Turkeys don’t like voting for Christmas or doing someone else’s job.
Markets halls and open markets should be assessed on a ‘profits-generated’ basis
The Quarterbridge view is that simple-to-administer single assessments for market Halls should be used and both markets halls and open markets should be assessed on a ‘profits-generated’ basis at the financial year end, using trading accounts and online self-assessment. This will remove a whole raft of administrative costs and make the system fairer all round.
If you’d like to make your views known to HMG and see the terms of reference for the review, then go to http://www.ow.ly/LwMDy
Act now and have your say
Responses have to be received by 12th June which ain’t far away so get weaving.