Labour unwittingly offers tax break for Boots and HSBC
Two weeks after taking aim at Boots boss Stefano Pessina, Labour leader Ed Miliband has unwittingly offered a tax break for the retailer.
Labour had said on Monday that it would cut business rates for properties with a ratable value of below £50,000. But according to research by property consultants Daniel Watney, this would also cut rates bills of more than 100 Boots shops as well as more than 5,000 banks, including the embattled HSBC.
Ed stressed that Labour’s first priority was “not further cuts for large businesses”. Labour’s report said it “will instead cut and then freeze business rates for small and medium-sized firms…a cut in business rates will mean an average saving of over £400 on 1.5 million properties.”
Labour stated that this change would help properties with a rateable value under £50,000, as reported by the FT on Monday. This figure has been verified by Daniel Watney as an accurate threshold for the lowest 1.5m properties listed by the Valuation Office Agency (VOA), the government body responsible for business rates.
In an embarrassing blow to Ed, his advisers failed to notice that all manner of major corporates occupy small buildings under this threshold.
The research by ratings specialists at Daniel Watney, a property consultancy, found around 110 Boots and more than 5,500 banks in England and Wales would benefit from the change, despite Ed’s pledge to not offer tax breaks for major corporates.
According to Debbie Warwick, head of business rates at Daniel Watney, rates payers would need to register themselves as a ‘small business’ in order to distinguish between massive corporates and independents. This would create needless extra bureaucracy for companies a massive headache for the council billing authorities.
Debbie Warwick, partner at Daniel Watney, said,
“The last thing businesses need is more complexity in an already messy business rates regime. A better solution would be to initiate more frequent revaluations and reduce the complexity that drives so many appeals.
“What we need is an overhaul of business rates to more frequent revaluations to more accurately reflect market changes between prospering areas and those lagging behind so that rates are more relevant. Furthermore by taking the smallest properties out of the system altogether would reduce costs to the smallest ratepayers and reduce collection costs for billing authorities.
“The yield from business rates is fundamentally too high which is why we see so many appeals from ratepayers against their rateable values. Charging at the full rate for empty properties since 2008 has encouraged avoidance in a system which previously was accepted as fair by ratepayers by allowing relief from full charge whilst a property was unoccupied and this reduced charge was rarely challenged.”
