Hospitality overpaying business rates by £2.4b every year

UKHospitality and the British Institute of Innkeeping (BII) have said they support government proposals to increase the frequency of business rates evaluations to three-yearly revaluations, but have stressed that it cannot come at the cost of extra reporting, restrictions on appeals and penalties.

The trade bodies highlighted the need for more wide-ranging reform to redress an “unjust and imbalanced” system and the need to move taxation away from property.

They said the hospitality sector overpays by 300% relative to its turnover under the current system, equating to £2.4b, and, following the pandemic, the system will put further pressures on heavily indebted businesses as they begin to rebuild and repair balance sheets.

They also expressed concerns over several proposals included in the consultation, which would put a “significant administrative burden” on hospitality businesses. They have proposed that:

• Businesses are not asked for more information than they currently are at revaluation as the need to report amendments mid-list is “burdensome” and will “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.
• The Valuation Office Agency to enhance its technological systems to facilitate data returns at valuation.
• Businesses should not be charged for challenges, nor there be fixed windows in which to bring a challenge.
• Government should consider minimising the time between the AVD and the new list to 18 months or lower.

In a joint statement 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.”

The consultation has been announced as part of the business rates review, which will conclude in the autumn. More information on the consultation can be accessed here.

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