Government launches inquiry into business rates impact

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business rates inquiry
// Treasury Committee launches new inquiry in to the business rates system
// Comes after one of the worst years on record for the UK retail industry
// Last inquiry on the controversial commercial property tax system took place in 2016

The government has launched a new inquiry into impact of the business rates system amid warnings that a further 100,000 shops will close this year.

The Treasury Committee said the inquiry would analyse if the current system is working, as well as the changes in reliefs and allowances that had already been announced by the government, the burden of business rates on companies, and the “behaviours it drives in businesses”.

The inquiry would also look at alternative policies, like the proposed digital services tax or a land-value-based tax, that could lead to a fairer tax regime between bricks-and-mortar retailers and online retailers.

The inquiry comes after the UK retail sector endured one of its worst years on record in 2018, with soaring numbers of CVAs and administrations amid a backdrop of dwindling footfall and consumer confidence.

“Many high street businesses are struggling to remain competitive,” Treasury Committee chair Nicky Morgan MP said.

“It has been estimated that 10,000 shops will close this year. Unless action is taken, closures could continue and job losses may soar.

“Business rates can represent a substantial financial burden on the high street. The Treasury Committee is therefore launching an inquiry today into the effectiveness and impact of these rates on business.

“At the end of the inquiry, we’ll make a series of recommendations to government on the fairness and effectiveness of the current system, and how it could be improved.”

Business rates generate an estimate of £32 billion of revenue for the government.

The tax system has met controversy in recent years, bricks-and-mortar and multichannel retailers being slugged with higher fees than online-only retailers which pay much less.

Several retailers have also blamed the current business rates system for store closures.

The last inquiry into business rates was in 2016.

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