It's time for business rates reform

01 August 2014
It's time for business rates reform

Pubs appealing their rates can't grow while their money is tied up in council coffers, says Chris Jowsey, Star Pubs & Bars trading director

In an industry of strong and sometimes differing opinions, few would deny that the business rates system is broken and that it needs fixing. But with the next revaluation postponed until 2017, the fix isn't coming soon enough for the thousands of pub, hotel and restaurant operators paying rates based on pre-recession peak values of 2008.

One area where improvements could come more quickly is with the overloaded business rates appeal system, where reforms are expected to come into force in October.

The scale of the impact of appeal delays on pubs alone is starkly illustrated by new analysis of 500 appeals made by Star Pubs & Bars on behalf of our lessees and through our retained ratings experts Gerald Eve.

Of our appeals, 50% are successful, but lessees have to wait on average 2.2 years and sometimes up to four years for resolution by the Valuation Office and their rebates.

This is hard-earned money sitting stagnant that could have been invested back into pubs to increase sales and, therefore, ironically, tax revenues for the government.

Our focus is on building long-term, sustainable pubs with multiple income streams, earning 50% of turnover from food.

It's frustrating to think of the strides that could have been made with this rebate money tied up with council - it could have created letting rooms, revamped kitchens or made new dining areas, let alone rewarded licensees for their hard work.

We have yet to see all the details of the changes due in October - let's hope this is not a sign of delays to come.

But with Gerald Eve estimating that nearly one sixth of our appeals are postponed due to understaffing of the Valuation Office Agency or late case worker substitutions, better resourcing of the Agency is clearly essential if the reforms are to work and appeals to be properly considered in a timely way.

Licensees also deserve more open treatment during those appeals, a move that would in turn reduce delays. The increasing trend, for the Valuation Office to play its cards close to its chest, only providing information the Office is relying upon at the last moment before a tribunal, has to stop.

Furthermore, where licensees have suffered declining trade for genuine valuation reasons, all too often the response from the Valuation Office is to simply blame the recession, relying too heavily on deskbased, computer-generated answers, rather than getting out from behind their desks to see the reality for themselves. Giving the response: "computer says no" but not the reasons is quite simply unacceptable.

Ultimately, only root and branch reform can solve the business rates crisis, including more frequent revaluations and the ability for licensees to appeal when their turnover is materially reduced.

Local businesses, residents and even politicians recognise the important role pubs play in keeping communities alive, so every effort should be made to maintain the health of our great British pubs and help them continue to play a vital role in our economy and social lives.

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