One of the UK’s leading accountancy bodies has called on the Government to urgently overhaul the current business rates system.
In a damning new report published this month, the Association of Accounting Technicians (AAT) said the business rates regime is “unfit for purpose” and is having a “negative impact on the economy”.
The call comes in response to the Treasury Select Committee’s recently published inquiry and consultation into the impact of business rates.
Citing the alarming number of businesses struggling to keep up with spiralling rates, as well as an ever competitive digital environment, the AAT has highlighted the retail sector as a particular area of concern.
So, what has the AAT called for?
Drawing inspiration from systems around the world, such as Hong Kong and the Netherlands, the organisation says revaluations should move from once every three years to once annually. This, it says, would provide “increased certainty and accuracy” for businesses whilst reducing “time-consuming and costly appeals”.
Secondly, the AAT says plant and machinery should be removed from business rates calculations. Doing so would actively encourage investment in new equipment, increasing the productivity and output of our factories.
Finally, the Government should form a “cross-party, consultative approach to agreeing a fairer, simpler alternative to business rates”. It said this new committee would consider issues such as the amount of revenue generated, the ease of collection and the level of political and economic acceptability.
Commenting on the report, Phil Hall, AAT Head of Public Affairs & Public Policy, said: “The system is creaking at the seams, it’s a 20th century system trying to deal with 21st century problems and needs wholesale reform.
“A cross-party consensus on reform would maximise the chances of long-term success and recognises that irrespective of political persuasion, most politicians genuinely want what’s best for businesses, large and small. An outcome that allows businesses to thrive is generally good for employment, consumers, and the British economy.
“The forthcoming Treasury Select Committee report into this issue could, therefore, be used as a starting point for a complete overhaul.”
The AAT’s response can be read, in full, here.