In recent months, there has been heavy discussion around a so-called ‘staircase tax’ and its impact on small businesses. The announcement by Philip Hammond, then, that this controversial tax was to be mitigated through legislation has been met with approval from businesses across the UK. Particularly as its removal is seen as incredibly beneficial to the growth of small businesses.
The legislation is expected to benefit over a thousand firms across the country.
What is the staircase tax?
Companies that occupied more than one adjoining floor but had a communal area, typically a staircase, were taxed as if they were operating from two separate premises rather than a single property separated by a floor. This meant a hike in their business rates, a bizarre loophole in the law.
To compound this issue, there was an impending demand for the payment of a backdated staircase tax for many businesses. This came about due to an August 2017 Supreme Court ruling on the issue, which meant that many businesses would have to pay a backdated bill for this tax as far back as April 2015. For Wales, the bill would be backdated even further to April 2010. The ruling essentially forced the VOA (Valuation Office Agency) to change the way it assesses separate floors in commercial offices occupied by the same company.
What Does This Mean for Business?
The new legislation promises to allow businesses affected by the staircase tax to have their original bill reinstated, irrespective of the actual valuation.
Overall, it is expected to be a great relief for many businesses that were unprepared for the unexpected levy in August. In some cases, it may be a much-needed lifeline for many small firms and start-ups. Many even hold out hopes that this will mean a wider reform of the business rate process as a whole, as this legislation restores a level of fairness back into business rates for smaller companies.
The Future of Business Rates
As a fallout from this, two senior judges have criticised the business rates process as a whole. Mainly in relation to the number of appeals that have been thrown out by the Valuation Tribunal and the fear that doing so is crippling small businesses across the country. Especially as, recently, nearly a quarter of appeals were thrown out on what many considered to be technicalities.
During such cases, minor breaks in procedure were considered potent enough to throw out the whole appeal. Judges Sir David Holgate and Martin Rodger have stated that the VTE should avoid such a zero-tolerance approach, especially as it affects small businesses so negatively. Especially in light of the more complicated appeal process which has recently been introduced.
Overall, though this helps business owners in terms of business tax, it does not remove all of the difficulties surrounding the process. For expert advice on your business rates appeal, don’t hesitate to contact the team directly or call 0161 429 1669.