Michael Lansdell: “Business rates taxes – the big guns are now calling for reform”
In August, a group of retailers wrote to the Chancellor, demanding that the “broken” business rates system be overhauled . The group included high-profile names – from Marks & Spencer to Harrods – and proposed changes to a system that saw nearly 10 per cent of businesses in arrears with their rates during the period 2018-2019 . The letter also talked about the “mish mash of reliefs”, which were introduced to support companies who may be struggling to pay.
The business rates system has been under fire for a while. Anyone who uses a building or part of a building for non-domestic purposes has to pay business rates. So, this isn’t just about the retail sector; pubs, offices and dental practices need to pay too. Managing the business side of operations can be the greatest challenge for principals and dental practice owners. Your success depends upon the provision of quality treatment and patient care, but also on providing an efficiently-run service. And bills must be paid!
The fact that large retailers want the business rates system reformed is a red flag – this isn’t just an issue for small-to-medium sized enterprises (SMEs). I last covered this topic in 2017, because April of that year had seen the first business rates rise in years.
As I had discussed then, the revaluation is something that is meant to happen every five years, but prior to 2017 it had been delayed, meaning that some businesses had faced a significant hike that year. At revaluation, the rateable value of a business property is adjusted to reflect changes in the property market. Back in 2017, the new business rates had taken into account the rise in property prices since 2008. A cap that set the maximum amount that rates could be increased by was also lifted. Ouch doesn’t really cover it!
Back up to date
So here we are, talking about business rates again. Two years ago, the Federation of Small Businesses warned about the devastating impact that the rates hike could have on small and micro businesses. If we bring the discussion up to date and look at the context for the retail sector, the UK high street is in an even sorrier state than it was in 2017. Even large retailers have been closing their stores and restructuring their businesses to reflect changing times.
What does this mean for dental practices? Well, whether you’re in a town, city or rural village, or whether your high street revolves around a big department store or a series of tiny independents, retail businesses are essential to keep all communities thriving. These are your patients too, so we should all be committed to keeping our high streets alive. They provide a vital support system to local people, who you want to come to you for their dental care.
It’s important to keep an eye on what is going on with business taxes; there should be nothing tax-related that gets in the way of the efficient running of your practice.
Michael Lansdell is a founding partner and chartered accountant at specialist dental and medical accountants Lansdell & Rose. He says: “Enlist the help of an accountant who understands the dental industry, such as the experts at Lansdell & Rose. With an uncertain future for the UK economy, as well as the ongoing need to adapt with the times, you should do everything you can to focus on your work, look after your team and your patients and get support with the rest.
1] Retailers push for overhaul of business rates system. Financial Times, 13 August 2019. Link: https://www.ft.com/content/2dadfebc-bce4-11e9-b350-db00d509634e (accessed August 2019).
2] Councils ‘take legal action for unpaid business rates.’ Public Finance, 6 August, 2019. Link: https://www.publicfinance.co.uk/news/2019/08/councils-take-legal-action-unpaid-business-rate1 (accessed August 2019).
Photo by Gordon Plant on Unsplash