Have cowboys saddled up outside your store? Aidan Fortune looks at some of the scams retailers are falling for and the best ways to make sure you don’t get caught out
Convenience retailing is an expensive business. Between business rates, energy bills and staffing costs, to name but a few, a retailer has to hand out a lot of cash before they see a profit. So it’s no wonder that if retailers are given the chance to save a bob or two, they will jump at it. However, all too often those offering to help you cut costs are actually unscrupulous con artists looking to rinse money out of you.
One of the most common tricks is fronted by the business rates cowboys. These crooked con men promise to appeal a business rate increase on your behalf - for an extortionate fee. Charlie Mitha of SMA Convenience in Sheffield was one of those to be caught out. When his business rates bill increased from £5,700 to £8,000, he was willing to accept help to reduce this, no matter where it came from. Unfortunately, it ended up costing him even more money. “A company called me and asked if my business rates had increased and if I was interested in getting a reduction,” says Charlie. “Of course, I was delighted with this and failed to read the small print. They were charging £450 to submit an appeal on my behalf, which is a lot of money.”
Rather than paying the full amount Charlie was able to convince the company to accept £150 upfront and to pay the rest when the appeal was lodged. However, several months went by and he heard nothing from them. “I tried contacting them, but they didn’t reply, plus they never came to the shop to find out any details needed for the appeal.”
When he contacted his council, they told him an appeal had been submitted but withdrawn due to a lack of information. The company is now in liquidation and Charlie is out of pocket. And due to the fact that only one appeal can be lodged during a business rates time-frame, Charlie is also stuck with the increased rate. He is currently in talks with the Valuation Office Agency (VOA) to see if they will allow him another appeal.
Charlie recalls how the company was “optimistic that he would receive a reduction in his business rates”. “They really sold it to me and made it seem like a reduction was a foregone conclusion,” he says.
Chartered surveyor Ken Batty says that Charlie’s is a common mistake. “Any firm stating what actual savings can be achieved in writing and in the form of an unsolicited letter before any inspection of the property has been made should be considered a ratings cowboy it is irresponsible and in fact impossible to predict without full inspection of the premises, which would only be done normally upon a fully qualified firm being instructed to state what savings can be achieved. The only reason why firms do this and send out this type of literature quoting these figures is to entice somebody to sign up with them, but the reality is very far from this - they should be avoided.”
Batty says that the best way to avoid getting caught out is to be alert. “They word the contract so that payment is required on the acceptance of an appeal,” says Batty. “Of course, all appeals are accepted by the VOA and can be submitted by anyone. It’s if they’re successful or not that determines if there will be a rates reduction. It’s a practice a lot of the rates cowboys use, and it stinks.”
Batty points out that retailers can appeal their business rate themselves, but they will get better results if they use a reputable service.
“The VOA requires full evidence sent to them before they will do anything about an appeal, so gathering the evidence, knowing how to analyse the evidence, referencing the property and so on is a very specialist area,” he says. “Experienced rating practitioners will know exactly how to deal with these matters and will without doubt obtain the very best results.”
Charlie advises other retailers not to make the same mistakes he did. “Always read the small print before agreeing to anything, and check out the companies to see what their reputation is,” he says. “Times are tough enough as it is without losing more money to people like this.”
It is often the case that cowboys prey on busy retailers who may not be aware of what they should be paying, or the current legislation affecting their store.
Personal Appliance Testing (PAT) is another area where retailers are being exploited. The current PAT legislation states that while all electrical appliances in a business need to be tested annually, the person testing doesn’t have to have a qualification, in fact it can be completed by any “competent individual”. If you are unsure about whether your skills are enough to assess that an appliance is safe to use, there are City & Guilds training courses available.
Doug Russell, health and safety officer at shopworkers’ union USDAW, says retailers have been paying out for testing services unnecessarily. “The legislation has been in effect since 1989 yet companies still charge money for annual testing that could easily be done by a member of staff,” he says. “Retailers should look at the wording on the Health & Safety Executive website to see what they need to be testing and how regularly. For many appliances, a visual test is sufficient with testing done every two years.”
Russell says that it’s this type of misconception that has been costing retailers for years. “I would urge store owners to look at the legislation and see what they are actually legally obliged to do, rather than making an assumption,” he says. “It could save them a lot of money in the long run.”
Dee Sedani of Londis Etwall used to pay for PAT testing, but no longer does. However, he does warn retailers to be very sure about what they are doing before conducting the PAT testing themselves. “I know that it’s £100 that a retailer doesn’t legally have to spend, but if you’re not sure what you’re doing you’re better off getting a professional in for the sake of the health and safety of your team,” he says. “You should always look to save money, but never at the expense of someone’s health.”
Dee says that if retailers aren’t sure if they are being scammed or not, they should contact their symbol group if they have one. “I had some confusion over PRS and PPL licences for playing music, which Musgrave were able to clear up straight away,” he says. “The temptation to simply pay a bill so it will go away is great, but if you ask your group they should be able to help you out with exactly what you need to be paying for.”
Unfortunately, new scams pop up every day and one area that our agony aunt Jac Roper identifies as ripe for exploitation is the government’s Green Deal. Introduced as part of the coalition’s Energy Bill in 2010 to enhance the energy efficiency of properties, the Green Deal centres around financial incentives for good energy practices. She says: “Although well intended, the details seem to have been worked out on the back of a fag packet,” she says. “To get the finance, your business needs to be assessed as suitable by an accredited advisor. The worry is that ‘specialists’ will move in asking for fees to introduce these providers. It could be fertile ground for ‘independent consultants’ offering to take you through the process.”
Retailers looking for approved assessors should log on to www.greendealorb.co.uk or look for the Green Deal Approved mark.
While the Green Deal is in its infancy, energy efficiency has been a source of scams for some time. Paul Cheema of Malcolm’s Store in Coventry almost signed a long-term contract with an energy auditor that would have left him out of pocket.
“They wouldn’t do the audit until I signed a lengthy contract,” he says. “It shows that you should always go through the fine details of any contract as the terms may not favour you. I certainly didn’t want to pay a company every month just for them to tell me how to switch off a light.”
Paul isn’t against energy audits, rather the companies that charge extortionate fees. “It’s certainly not something you should be paying through the nose for,” he says. “There are reasonably priced energy auditors out there who will do a fine job without attempting to tie you into a long, costly contract.”
If you’re careful, read the fine print, and question ‘too good to be true’ deals, then you should be able to fend off these varmints.•
How to spot the rates cowboys
● Background checks - Before proceeding with any firm, first establish whether it is a member of the Royal Institution of Chartered Surveyors, a member of the Institute of Revenues Rating & Valuation, and member of the Rating Surveyors Association
● Fine print - Any contract that is offered to a party asking them simply to tick boxes to sign up for more than one revaluation should be avoided
● Legal jargon - Never sign a contract without fully understanding it
● Sharp practice - Any contract that states a fee will be payable once a letter of acceptance from the Valuation Office Agency (VOA) has been obtained should be avoided. All appeals to the VOA are accepted, it is whether or not they are successful that counts
● Cold callers - These should be avoided like the plague as no reputable firm would send in anyone as a cold caller.