Beales crippled by transitional relief

15 01 20 business rates

Struggling Retailer paying over £1 million more in business rates than it should be.


Struggling department store Beales which is at risk of collapse into administration unless it can find another last-minute buyer, is the latest victim of the absurdity of the business rates system, particularly transitional relief says John Webber, Head of Business Rates at Colliers international.

Beales’ 22 regional stores are paying a total of £2.847 million in business rates this year- but according to estimates by Colliers this is more than they should be- all due to downwards phasing introduced following the 2017 Revaluation. Adding up the four years of overpayment by Beales, Colliers estimate the retailer has paid £1.060 million in business rates more than it should have in the years since the revaluation.

Business rates are based on a property’s rent. Transitional relief was designed to reduce the increase by which rates would rise following an upwards rent revaluation, staggering the rise over a four-year period.  But to keep the total business rate tax take revenue neutral, this has been funded by those businesses based in areas where rents were dropping and who should therefore have been seeing their business rates payments reducing. Instead, for many businesses, business rates reductions have been phased in slowly with the result that many struggling companies have perversely been paying more than they should be, whether or not they could afford to.

In Beale’s case, the company saw a 14% decline in its rateable value in the 2017 Valuation and therefore should have seen a 14% reduction in its rates bill. In reality it only saw a 3% drop in 2017/8 and in subsequent years the drops were -1% and -2%. To quote John Webber, “In a period in which retail has already been struggling due to internet competition and other rising costs, such rates reductions have been pitifully inadequate” and” have certainly contributed to the business’s current demise.”

Tony Brown the Chief Executive of Beales has called the business rates situation at the company “lunacy” and claims in some stores the rate bill is 3 or 4 times the rent bill.
John Webber added, “Of course Beales is not alone. Many other stores who have joined the long list of CVAs and administrations since 2017 have suffered in a similar way. A number of Debenhams and House of Fraser stores on the closure lists were there because they were paying artificially high business rates due to phased downwards transition. Toys R Us suffered the same fate and was paying many hundreds of pounds worth of business rates bills higher than it should have been.”

Webber adds, “There is one chink of light at the end of the tunnel. We are about to see a new Revaluation in 2021 and given retail rents have collapsed, business rates falls should in theory follow. Of course, the government could put a spanner in the works and again introduce downwards transition as it did in 2017, limiting reductions. But that would be disastrous."

"One can only hope (and pray) that Mr Johnson and his colleagues have learnt from the deserted high streets of 2020 and the thousands of jobs losses -and provide a fairer playing field for the physical retailers. If he doesn't, I'm afraid the crisis can only get deeper.” 

 

 


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John Webber

Head of Rating

Birmingham

I have over 30 years’ experience in the rating industry and lead a 90 plus rating team at Colliers International.  When I took over responsibility for the team in 2005, it consisted of only a dozen people and has now grown into one of the leading rating advisory teams in the country.  I am a member of Colliers International Management Executive as well as sitting on the company’s promotion panel. 

I am regularly called upon by the national media to give my views on a range of business rates issues and I am vocal commentator on the 2017 Revaluation.

I started my career in the Valuation Office Agency in Kidderminster.  I joined Gerald Eve in 2000 where I spent 10 years before moving to Gooch Webster (now Colliers International). I sit on the National Retail Panel of Rating Surveyors Association which provides guidance on how the RSA town committees work with the VOA and valuation matters.  John sits on the RICS Rating Diploma Committee having passed the prestigious qualification in 2014.

Philip Harrison and I founded 'Accurates' in 2007, the Collier's Compliance and Audit team, which although forms an integral part of the Rating Team is now a leading brand in its own right.

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Hannah Zitren

PR Manager

London - West End

Currently on maternity leave.

As PR manger in the UK, I am responsible for media relations and generating coverage in top tier media. I work across a range of Colliers’ UK & Pan-EMEA business lines (residential; licensed and leisure; planning; hotels; retail; healthcare and automotive) advising on their strategic and tactical PR needs.

My role includes:

·         Developing and executing PR plans for the various business lines to help promote their key messages across all aspects of the media - print, broadcast and social.

·          Media evaluation and reporting objectives, targets and successes across the business.

·         Reputation management and crisis management.

·         Media training.

·         Media engagement: setting up meetings with top tier media and various internal spokespeople to continuously expand and build a presence with property and vertical media network.

·         Consistently delivering service excellence, meeting with business heads of a regular basis and trying to influence the research as much as possible to ensure our content has a strong enough news hook.

·         Key campaigns that I work on include MIPIM; MAPIC; REVO; Midsummer Retail Report; IHIF; Cities of Influence in addition to a host of all alternative property sector research reports.

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