BRC calls for reformation of the UK's business rates system

The British Retail Consortium recently published three potential options for the UK's

business rates system, as retailers and other business groups have argued that the current system creates disincentives for investment in property and as a result, smaller businesses are stuck with a higher burden. The BRC also argues that the system is “woefully out of date” since the rise of online shopping.

“We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK,” commented Helen Dickinson, director general at the BRC. The Road to Reform, proposes three “potential options [which] would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the Government,” adds Dickinson.

One of the options suggested by the BRC would reform the existing system to reward businesses that contribute to the UK by paying corporation tax in the UK by offering them a discount on their rates bill. The benefits would be received by profitable companies, whether larges or small, with potential for greater relief for SMEs. However, the Guardian suggests that introducing this reform to the current system may have an impact on multinational online retailers, such as Amazon, who have been castigated for paying hardly any corporation tax in the country.

Another possible option would also see a reform of the current system to deliver discount to the rates bill on a given value per employee. As such larger retailers with more employees would benefit from such a reform. However the most interesting option the BRC has suggested would introduce a new tax to replace business rates based on energy consumption, which could be delivered through changing and enhancing the Climate Change Levy (CCL). The new tax should reflect existing considerations that are part of current business rates, excluding small businesses who do not pay CCL from the new rates system completely.

John Rogers, chief financial officer, J Sainsbury, who has chaired the group of executive level members across the industry project for the BRC adds: “The current system is outdated and cumbersome and does nothing to encourage retailers to invest. We believe we can do better for business and for tax payers and these options represent tangible progress in the debate on what reform could look like if we think about retail in the future, rather than the past.”

The BRC stresses that further debate is needed to find ways to change the disincentive to invest in property, promote growth in jobs, GDP and support entrepreneurs instead of just implementing further changes to the current system.