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Treasury Committee Urges Overhaul of ‘Broken Business Rates System’

Written by: Keith Tully

Reviewed: Thursday 31st October, 2019

Business team meeting about business ratesA committee of MPs in Westminster has called for a rethink and potential overhaul of the UK’s business rates system, which it describes as being “broken”.

In a newly published report, the Treasury Committee notes that business rates are outpacing inflation in terms of their costs to enterprises and growing as a proportion of the tax amounts that companies pay.

Retailers and manufacturers are highlighted as companies that particularly suffer as a result of the current business rates system, with the way things work at present being notably favourable to online operators.

There are reliefs available to companies in relation to business rates but these are described by MPs as being a “complex web” that form part of what is generally a “broken” system.

The parliamentary committee has recommended that relevant rule makers within government look closely at the issue of business rates and consider what changes might be made in advance of the spring 2020 budget.

The committee’s report summary makes clear that the system as it currently works means that businesses with a physical presence, like high street retailers and others, face “far greater cost” when it comes to business rates than their online counterparts.

“Tweaking the current system of business rates through an increasingly complex web of reliefs does little to address the negative aspects of this tax and simply demonstrates how broken the system is,” the report says.

“Business rates are an important source of revenue but the government must explore alternatives to address their negative impacts,” it added.

Alison McGovern MP, who led the Treasury Committee’s recent inquiry into the issue, said: “Odd reliefs here and there are nothing more than sticking plasters to a system in urgent need of reform.

“The committee was presented with numerous alternatives to the current system, but none of them had been sufficiently modelled to examine who would be the winners and losers of any change.

“The government must examine such alternatives in time for Spring Statement 2020.”

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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