As most retailers will know, the business rates system in the UK has been a source of frustration for years.
As if to illustrate the point, property agents Colliers announced last week it was opening a new office in Cheltenham specifically to deal with the growing number of business rates enquiries.
Convenience Store spoke to John Webber, its director and head of rating, to find out where the business rates system is failing, and how it might be fixed.
“There’s more demand for our services and that will continue,” Webber said. “Even if we were in a low inflationary period and things were booming, there would always be a requirement for business rates advisory services.”
Complex system
The system is complex, fraught with room for error and miscalculation. Add to this the fact property prices have soared in the 36 years since the valuation multiplier was introduced, and the waters become even murkier. “Everyone knows the margins are tight - be it due to increased utility bills or employment costs - and business rates are just one of those things that have also gone up significantly,” Webber added.
Colliers recently launched its 35x35 campaign, calling for a roadmap to reduce the multiplier to 35p by 2035 and give more immediate support to retail, leisure and hospitality.
Webber explained: “If you go back to start of the modern era of revaluations, it was in 1990 when they started in in modern times. The multiplier was 34.8p.
“That was 36 years ago. Inflation is built into the value - it didn’t and doesn’t need to be built into the multiplier too. What’s happened is values have gone through the roof, but the multiplier has almost doubled too. The other problem is there’s 2.15m entries in the rating list, and 700,000 businesses don’t pay anything.
“If all you do is have a smaller number of people paying tax because the rate’s too high and people can’t afford to pay, and you take people out and give them relief, you need more and more money - and the people paying the tax get hammered.”
Growing requests
Against that backdrop, retailers are finding it increasingly hard, leading to more requests for a review of property valuations.
“Retailers always come up with new ideas and it’s amazing…”
Webber added: “I admire retailers because retail is one of the most resilient things. They always come up with new ideas. It’s amazing. If you’re running a business where the margins are small, you have to keep on top of every cost.
“Because business rates have crept up - it’s now almost a 50% tax - it puts pressure on people like us to do things quicker. If you’re a retailer and you’re doing well, you could have a situation where the money that comes in from the rates refund is greatly welcomed.
“What you find now is retailers rely on that money coming in every year to keep costs down. It becomes an issue when the valuation office can’t process appeals quick enough.”
The volume of appeals has also increased significantly: “The volume isn’t going through at the rate it should. Appeals drag on for three, four, even five years. It’s not that retailers don’t know whether they will be getting their money back, it’s just the time it takes.
”For smaller traders, the cash flow and the time spent becomes more of an issue.”
“For smaller traders, the cash flow and the time spent on dealing with an appeal becomes more of an issue. If you’re a big retailer, you’ve got so much in the system you can afford for it to drip through. The smaller traders can’t. It can make the difference between succeeding in trading or not.
“I had a meeting with a retailer with about 100 properties. They said in the 2023 list, which effectively finished on the 31 March 2026, there are more cases outstanding now than the valuation office processed during the 2023 list in total.”
This has a knock-on effect, Webber said: “The heartbreaking thing is this retailer had to close a number of stores because the outgoings were too high. If he’d have thought those business rates were 20% or even 30% too high, and he would get redress for this quickly, he could have kept them open and kept jobs going, and maybe have hung on for when that rating assessment was reduced.”
Flawed system
Clearly the system in the UK is flawed, with store closures leading to empty shops. But does Webber see any light at the end of the tunnel?
“We’re piloting a different way of doing things. The valuation office is receptive to people who want to engage with them on the next list. We tell them what the valuation is, because we have all the data. I think that will be widened to certain types of properties and retailers.”
“If there’s a greater engagement, there’s no surprise”
Webber added that this approach would prevent any nasty surprises when official data is released. “You know what’s coming - that’s what caught them on the hop for the 2026 list, particularly in hospitality, because pubs and hotels didn’t know what the answer was going to be. If there’s a greater engagement with the valuation office, there’s no surprise.
So, can the Government make the business rates system fit for purpose? Webber said it is possible: “If they’re serious about helping the high street, they could do it. If they get lost in the price of oil, Iran or Ukraine, that isn’t going to happen - and that isn’t going to help the high street.
“It’s a vicious circle. But you can break it if you’re brave enough…”
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