Sun. Jan 24th, 2021

Business rates: ‘We might as well hand back the keys’

One trader says that after a seven-fold increase in rates, he “might as well hand back the keys”.

James O’Hara has spent £120,000 converting a disused public toilet in Sheffield into a popular cocktail bar.

But after a more than seven-fold increase in business rates, he says he “might as well hand back the keys”.

It’s stories like Mr O’Hara’s that elevated the subject of business rates to take centre stage at the CBI conference on Monday.

Boris Johnson pledged to review the system and Jeremy Corbyn announced plans to reform business rates, which have been blamed for helping create the challenging High Street environment that has led to store closures across the country. The Liberal Democrats have said they would scrap business rates entirely.

‘Lack of consistency’

Mr O’Hara says his bar, Public, was “literally a toilet” when he rented it two years ago. It is now a 24-seater cocktail bar with a turnover of about £300,000 a year.

But that transformation has not escaped the attention of the government’s Valuation Office Agency (VOA), which sets the value on which business rates are based.

Mr O’Hara’s investment has increased the so-called rateable value of the bar from £3,250 a year to £23,750. That’s the rent that the VOA thinks Public should be paying.

As a small business, the bar has to pay 49.1% of that rateable value in business rates.

Last year, the bar paid £560 in rates, so Mr O’Hara was shocked to open this year’s bill for £7,760.

The businessman, who runs a number of bars in Sheffield, says there is a “complete lack of consistency” in the way that rates are set.

He says Public, a cosy underground cocktail bar, now has the same rateable value as another one of his other premises, the Great Gatsby, a much larger pub over four floors, which banks around £1.2m a year.

Mr O’Hara says he will appeal against the new rates, and he expects to win. But in the meantime, he could face a court summons if he refuses to pay the higher bill.

He says the difference is “make or break money” for a small business.

That will sound familiar to Rowena Howie – who runs Revival Retro – a boutique in London.

Rowena Howie outside Revival Retro

Her neighbours shut up shop the same day that an increase in rates was announced in 2017.

Ms Howie hopes she won’t have to do the same with her store, but she says that her £55,000 rates valuation makes it “exceptionally hard” to survive as a bricks and mortar retailer.

For her, headline election pledges are of no interest unless the politicians make good on them.

“I’m sick and tired of empty promises,” she says.

She says small businesses are the lifeblood of the economy and she warns that it is getting harder to survive on the High Street.

Sean Hughes, who runs The Boot in St Albans, knows the impact of business rate increases all too well.

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