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Inland Revenue and Rates, (Barrel-dregs)
I have had a number of discussions with the Inland Revenue Valuation Service, most have been successful apart from one, which the Valuer that I spoke to refused to meet me and discuss the problem and said his decision was final.
The other Valuers were far higher up the pay scale and listened, none had ever run a retail business, which was patently obvious.
They had been schooled on a system, that had worked for years, until the emergence of large scale supermarkets and large corporations dealing with retail sales, without considering the drop off of existing business in town centres.
My dealings with Pub Co Surveyors, who again have never run a small retail business, have always made the assumption that business in a catchment area is infinite, it is not and is finite and in many cases falling, the Pub Co’s will fight to retain the over estimation of rents and likewise the Valuation Officers rates, they will not reduce the rateable value of a commercial property without a massive struggle, in fact they will only deal with a similar Valuer who has been schooled on the same system, which leaves a gap in the system based on business common sense.
We have dying town centres, where rents and rates are extortionate, the business is moving away from town centres to the out of town large supermarkets with substantial free car parks and easy accessibility.
Planners have screwed up town centres favouring out of town shopping, if the press are to be believed these supermarket rates payable are a minimal percentage of turnover, most sell everything, there is no point in going to a town centre unless you want a specialist purchase, these specialists are vanishing more and more to be replaced by charity shops or boarded up vacant commercial properties.
The properties in town centres are invariably leased from local authorities or large property corporations.
Large property corporations are feeling the pinch, the local authorities assume there is a bottomless pit of money from every business in their patch, to be milked at every opportunity, this has now become the squeeze on a nearly empty money pot.
Hence the empty/vacant shops, replaced by charity shops and boarded up shops in every part of the town centres, added to which the growth of Shopping Malls would appear to have hit the wall, with many shop fronts vacant or boarded up.
Our local Shopping Mall has changed hands three times in recent years.
Some bright or should I say idiot Valuer, came up with the idea that full rates are payable on vacant commercial property, six months after it becomes vacant, regardless of the owners having insufficient funds to meet this excessive bill.
In my case, on a small factory, the rates were way in excess of the rent achievable, especially in a recession.
What they should have done, was reduce the rates for two years and make the factory viable during the recession, employing people rather than force them out of business, through a cranky valuation system that assumes that every business is a “Crock of Gold”, rather than a massive struggle in tough times.
We had some friends round for a meal recently and the conversation got round to commercial rates and rents, there had been a large article in the paper about the demise of town centres and the growth and over supply of supermarkets, in addition the minimal percentage of rates paid in relation to turnover.
My experiences in the pub industry sounded remarkably similar with the growth of very large Pub Co’s.
The initial fault lies with Local Planners in allowing almost unrestricted growth of supermarkets, there is only a finite amount of business in a catchment area, whatever the size of the catchment area.
Every out of town supermarket that is allowed to be developed, takes more business from the town centres and local shops and their business, as a result, is falling, are the rates and rents going to be reduced, not on your life these Valuers don’t understand the retail business.
Sadly, you have to use a so called expert to achieve even a small reduction, in my friends case it cost £20K.
The top Valuer that I raised these obvious flaws in the system to, asked me to write to the Inland Revenue and raise these points, because he had never considered them and the effect it was having on smaller businesses. LINK
Their response was decidedly negative for obvious reasons, to admit that their system was flawed and reduce all the rates in affected areas, would be a massive financial disaster, yet they are happy to subsidise massive supermarkets at the cost of small businesses who keep local economies going, the massive amount of money taken by supermarkets, the majority goes out of the area into a large corporation pot elsewhere.
Will the Inland Revenue Valuation Office change their views, for a more practical system, unlikely or will they follow existing rates continue to be based on rents that small businesses can ill afford?
There is an old saying, “They make money round to go round”, this may not technically apply because of Credit Cards, but it does work.
Note:-If you agree with these thoughts send this to your Local MP.
The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.
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