Business rates reform urged by UKHospitality

Industry body UKHospitality has urged the government to reform business rates as part of a new consultation.

It is backing a proposal to increase the frequency of evaluations to three-yearly revaluations – but this cannot come at the cost of extra reporting, restrictions on appeals and penalties

The hospitality sector overpays by 300% or £2.4 billion a year relative to its turnover in the current system.

Following the pandemic this “already unfair” system will put further pressures on heavily indebted businesses as they begin to rebuild and repair balance sheets, according to UKHospitality and the 9,000-member British Institute of Innkeeping (BII).

They stressed the need for more wide-ranging reform to redress the current “unjust and imbalanced” system, and the need to move taxation away from property.

The trade bodies are also concerned about a number of further proposals included in the business rates revaluations consultation, which will put a significant administrative burden on hospitality businesses.

They propose that:

• Businesses are not asked for more information than they currently are at revaluation: the need to report amendments mid-list is burdensome and will actively discourage investment in the sector at a critical time.
• The move to more frequent revaluations be considered as part of the broader review of business rates – which should be designed to reduce, not increase, the burden on ratepayers.
• The Valuation Office Agency should enhance its technological systems to facilitate data returns at valuation.
• Businesses should not be charged for challenges, nor should there be fixed windows in which to bring a challenge.
• Government should consider minimising the time between the AVD [Antecedent Valuation Date] and the new list to 18 months or lower.

The trade bodies said: “The current business rates system has long been unfit for purpose and puts an unfair burden on pub and hospitality businesses.

“It’s extremely encouraging that the government is proposing to increase the frequency of revaluations, something for which we have been calling for some time.

“However, the proposals are severely undermined by administrative burdens, limits on appeals and penalties.

“It’s vital that government reforms match the severity of this issue. This proposal is helpful but does not redress the wide-ranging issues with the current system that will severely hamper the sector’s ability to recover from the pandemic if not addressed.

“We urge the government to work closely with the sector to implement wide-ranging reform that will empower hospitality businesses, to rebuild and repair revenues, create jobs and be at the forefront of the economic recovery.”