Tory tax hikes could put some rural businesses out of business

A disturbing article from The Times highlighting how businesses which are land dependent, such as stables, kennels and livestock markets could be set for huge Tory tax hikes.  This Conservative government policy could have major ramifications for Copeland.

Country heartland fears mortal blow

Lucy Bannerman

January 23 2017, 12:01am, The Times

Ruth Gardiner lives in a mobile home and employs one member of staff. Hers, she insists, is a business run “for love, not money”. So she was “absolutely horrified” to find that her riding school in the Berkshire village of Hamstead Marshall faces tax rises of 225 per cent in the largest shake-up of business rates in a generation.

Enborne Equestrian Centre will find itself among the biggest losers when new business rates take effect on April 1, along with telecoms giants such as BT and Virgin Media. About 920,000 businesses will have payments cut, while 420,000 will see no change. However, 510,000 (27%) face increases. A surprising number appear to be in rural areas, where small businesses such as Ms Gardiner’s run on a muddy shoestring.

The rateable value of Ms Gardiner’s 35 acres has risen from £5,700 to £18,500 — an increase that disqualifies her from small business relief. It will also push the amount that she has to pay to the council on each of her 38 stables from £150 to £600. Those kind of rates will ruin her, she says.

“There’s a point where you do think, hang on, I might as well go and work in the supermarket. I don’t know how I’ll survive,” Ms Gardiner, 49, said.

Rural enterprises are among those facing the biggest increases, according to the Valuation Office Agency’s own figures. Stables, vineyards and livestock markets rank among the top 20 worst-hit types of businesses.

Ms Gardiner hit out at the government’s lack of transparency in calculating the increases and the apparent inconsistency in rates, even among her local rivals.

“Why am I being rated the same as much bigger yards? It just doesn’t make sense” she said. “Like many rural businesses, I do this for the love of it, not to make money. This place is run on a DIY basis. Nobody is making a fortune. It’s not hugely profitable.”

Rates are decided not by turnover but by a business’s “rateable value” — the potential rental value of its premises on a fixed date, as estimated by assessors from the Valuation Office Agency (VOA). It says the revaluation will ensure fairer rates but declined to comment on why certain types of businesses appear to be hit harder than others.

One of them is the Pembrokeshire Riding Centre in south Wales, whose annual bill is about to rise from £2,000 to £7,500. For 30 years Sue Scourfield, the owner, has been welcoming foster children and disadvantaged teenagers to her livery yard, where City and Guild apprenticeships are offered to young people who have been excluded from mainstream education.

“We are not turning out Olympic riders and fantastic showjumpers. We turn out young people who learn discipline and life skills, how to turn up for work and be part of a team. We are not grand. If we make £3,000 a month, we’re lucky,” Ms Scourfield, 66, said.

She wants to know why assessors believe her rateable value has risen from £6,500 to £13,750. “If that was the case, I wouldn’t be working — I’d be renting the place out, sitting back and watching the money coming in.”

She urged the VOA to apply some common sense to their calculations. “This is ivory tower syndrome. They look at the measurements and work out sums on their calculators but they never look at the faces of the businesses they’re punishing. Of course everybody should pay their rates — but there is a moral aspect. The system has to be fair.”

She began the business with the help of a government grant “back when they were supporting sport and the outdoors”. Now, she fears she may be forced to close.

“Maybe we’ll survive this year but possibly not next year.”

The British Horse Society has launched a campaign supporting calls for a national rethink of the rates system.

Glyn Davies, the Conservative MP for Montgomeryshire, said: “I can see this becoming a very, very big issue. There is going to be a bit of an uprising. If we see businesses closing . . . it will destroy local communities.”

He also wants to see the workings behind the calculations. “Just what are the instructions to the district value assessors? They have got to go on actual rental value, not some notional rental value based on space.”

Vineyards and wineries will have an average rise of 79.3 per cent, livestock markets’ rates are going up 86 per cent while cricket grounds are in line for an increase of 51.6 per cent, according to the VOA figures. Kennels and catteries will have average rises of about 75 per cent. Caroline Kisko, secretary of the Kennel Club, said: “This will be a huge concern as it could put a big chunk of people out of business.”

Simon Hart, chairman of the Countryside Alliance, said: “Some of these rates decisions are mathematical exercises calculated at a desk that don’t take into account the individual business.

“It strikes me as peculiar to push some people into giving up their business or having to downscale. That cannot be in the interest of the collecting authority as it will mean less tax going to the Treasury and that is surely not the intention.”

What are business rates?

Business rates are the commercial equivalent of council tax. About 1.8 million premises are eligible. Exemptions include farms, fish farms and churches.

How are they calculated?

Assessors from the Valuation Office Agency, an executive agency of Revenue & Customs, estimate how much they think the rental value of a property is worth. That rateable value (RV) is then multiplied by a figure set by central government.

How many winners and how many losers?

About 920,000 businesses have their rates cut and 420,000 will see no change. However, 510,000 described by the government as a “small minority”, will see rises.  (It’s 27%, so over one quarter)

Can the revaluation be challenged?

There is the possibility of appealing but the appeals process was already suffering a backlog even before the latest revaluation. It can take years and businesses must pay the disputed bills in the meantime.

WINNERS AND LOSERS

BUSINESS FACING THE BIGGEST % INCREASES IN RATEABLE VALUE . . .

  • Telecommunications cable networks up 201.3%
  • Landfill gas generator sites up 143.6%
  • Stud farms 99.2%
  • Livestock markets 86.%
  • Polo grounds 83.7%
  • Vineyard/wineries 79.3%
  • Railways and tramways 77.6%
  • Arenas 76.9%
  • Animal boarding 76.5%
  • Cemeteries 69.2%

THOSE FACING THE BIGGEST % REDUCTIONS IN RATEABLE VALUE

  • Photographic booths -45.9%
  • Iron and/or steel works -40.7% 3
  • Liquid build storage -25.4%
  • Nuclear establishments -25%
  • Mineral producing hereditament -23%
  • Waste transfer stations -19.3%
  • Civic amenity sites -19.1%
  • Power generators -19%
  • Oil refineries -17.5%
  • Landfill sites -16.4%

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