Hospitality overpays business rates by £2.4bn per year

By Lisa Riley

Published: 25 August, 2021

UK Hospitality (UKH) and the British Institute of Innkeeping (BII) have called on government to introduce business rates reform after estimating that the sector overpays by £2.4bn each year.

The trade bodies said they welcomed the opportunity to comment on the government’s Business Rates Revaluations Consultation and support the proposal to increase the frequency of evaluations to three-yearly revaluations.

However, they added, this could not come at the cost of extra reporting, restrictions on appeals and penalties.

While recognising the “helpfulness of the consultation in addressing one area of reform”, UKH and BII stressed the need for more wide-ranging reform to redress the “unjust and imbalanced current system”, and the need to move taxation away from property.

They estimated that hospitality overpays by 300% relative to its turnover in the current system, stating that following the pandemic this “already unfair system” would put further pressures on heavily indebted businesses as they begin to rebuild and repair balance sheets.

“The current business rates system has long been unfit for purpose and puts an unfair burden on pub and hospitality businesses,” the trade bodies said in a joint statement.

“It’s extremely encouraging that the government is proposing to increase the frequency of revaluations, something for which we have been calling for some time. However, the proposals are severely undermined by administrative burdens, limits on appeals and penalties,” they said.

It was therefore “vital” that government reforms matched the “severity of this issue,” they added.

“This proposal is helpful but does not redress the wide-ranging issues with the current system that will severely hamper the sector’s ability to recover from the pandemic if not addressed.”

UKH and BII also voiced concern about a number of further proposals included in the consultation, which they said would put a “significant administrative burden” on hospitality businesses, proposing a number of further changes to the current rules.

These include businesses not being asked for more information than they currently are at revaluation and the move to more frequent revaluations to be considered as part of the broader review of business rates.

The duo also recommended that the Valuation Office Agency enhanced its technological systems; that businesses should not be charged for challenges, nor should there be fixed windows in which to bring a challenge and that government should consider minimising the time between the AVD and the new list to 18 months or lower.