Business rates must be overhauled as North West high streets prepare for difficult Christmas, says retail expert

27th November 2020, 3:21 pm

A complete overhaul of the business rates system is critical to the future of high streets in the North West, warns the head of retail at law firm Brabners.

With high street footfall over the crucial Christmas trading period predicted to fall by more than 70% compared to 2019, according to data from joblessness charity Springboard, the high street is unlikely to receive its normal fourth quarter sales boost.

This, argues Richard Roberts of Brabners, makes a complete rethink on the business rates system, which many agree disproportionately affects high street retailers, essential to the sector’s survival.

Richard said: “There have been several calls recently for the government to introduce a modest business rates reduction which, on expiry of the current holiday, would provide some support to struggling retailers. But these measures are blunt instruments that will not address disproportionally greater challenges facing high street occupiers, which are unfairly penalised by the current system’s link to property values.

“The Chancellor’s spending review contained no plans for what happens after the rates holiday ends in a few months’ time – falling at the end of the first quarter when bills for Christmas stock loom large – and retailers face the prospect of an incredibly difficult year with no additional long-term support. This will be felt acutely in the North West where businesses have been hit harder than most by harsher restrictions under the Covid-19 tiering system.”

Brabners has called on the government to reform the business rates system, outlining a four-point action plan for a new, fairer model of taxation that would work for all types of retailer.

The firm’s four-point plan for business rates reform recommends the government:

  • Review rates annually, rather than every five years, so they more accurately reflect the evolution of the market.
  • Abolish transitional relief for businesses that are due a reduced liability, following a revaluation, so they receive the benefit of it immediately.
  • Shift the focus of the tax away from the property a business occupies onto the business itself so that it is taxed based on its overall value.
  • Implement a phased reintroduction of business rates when the holiday ends in 2021 to avoid the ‘anvil effect’ a full tax bill will have on struggling retailers in the hardest quarter of the year.

Richard added: “At the moment the system doesn’t work for anyone and many have bemoaned the need for change without putting forward a cogent strategy for doing so. The action plan we have created intends to address that and provide food for thought to local and national political leaders as they look to support businesses in their recovery from the pandemic.”

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