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Business rates: the bane of business

Longnor-Wood_detail
Business Rates have long been the ‘bad boy’ tax of small business owners, and one which continues to be more than a royal pain in the proverbial for many FSB members. You don’t have to dig too long or too hard to find a business with a sorry tale to tell about how the tax has penalised them, and usually unfairly so in the eyes of most right thinking people.  

For FSB member John O’Neil, his story is about as bad as it gets – certainly the worst case seen in the Greater Manchester & North Cheshire region in memory. John, who runs Longnor Wood Holiday Park, near Buxton, saw his rates go up from £12,500 in 2016, to £63,000 in April of this year. 

“Yes, I had to read the letter a few times when I first opened it,” says John. “I was pretty shocked to say the least.”

The issue for leisure industry, he says, is that Business Rates are worked out solely on turnover, not profit, giving a skewed view of how much a business can actually afford to pay. The system fails to look at businesses on a case by case basis and relies on assumptions.

“We’ve been forced to employ a specialist to look at the figures and lodge an appeal for us – which is costing us more money,” continues John. “It’s been long and protracted, and yet here we are in September without an answer, but we think we’re going to have to pay around £42k.  

“While that’s a lot less than what we have been asked to pay, it’s still a huge amount, and far more than what we were paying before. It doesn’t seem fair when you consider how much money we’ve invested in the business, which I estimate to be over a million pounds.”

If the £42k figure is agreed by the Valuation Office Agency (VOA) – the body responsible for setting rates – John will pay £17,500 this year as part of transitional relief rules, £34k next year, and then the full amount the year after. 

Can he make the business work after he’s factored in those increases? “It’s going to be a huge dent in the business, but we’ll keep going,” he said. “My issue with it is that the VOA are looking at averages when they are setting bills, and you can’t take a one size fits all approach in a leisure industry like this. The current system completely ignores our situation. 

“We are very top heavy on staff as we do four hour turnarounds for the rentals, which are Friday to Monday, and Monday to Friday. We need a large cleaning force to do that, and so we have high outgoings. This is not the kind of business friendly environment you want to be in, but we are where we are.” 

Business Rates continue to be a thorn in the side of small firms, the latest issue that’s erupted this summer is the staircase tax, which is affecting thousands of businesses that the VOA are currently backdating. 

Are you based in Manchester & North Cheshire and have received a backdated bill as per the ‘staircase’ tax, and would like to be a case study for media in the future, e-mail details to robert.downes@fsb.org.uk