BHS could have saved over £15m per year had the business rates revaluation gone ahead as planned in 2015, according to Colliers International, the global commercial real estate agency and consultancy.
Under the current system, business rates are recalculated every five years. The last revaluation was in 2010, with much of the work completed before the property crash, resulting in ‘rates higher than rents’ in many parts of the UK.
However, in 2013, the Government announced that it would delay the 2015 revaluation which would have seen thousands of retailers nationwide – plus around 90 per cent of BHS stores – receive a reduction in their business rates bill.
In its new data analysis Colliers International believes that BHS could have saved over £15m per year – or £75m for the five-year business rates period – had the revaluation continued as planned. And with a current business rates bill of £44m, it is clear that business rates were a major factor in the stricken retailer’s demise.
Adam Burke, director of rating at the North West offices of Colliers International in Manchester and Liverpool, said:
“The Government decision to delay the business rates revaluation in 2015 certainly had an impact on BHS. It’s hard to know whether it was one of the final nails in the coffin, but clearly a £75m saving is a significant amount of money.
“Looking forward to the revaluation later this year, even in London – where we predict business rates increases for a lot of town centres – BHS could have saved something like £650,000 in rates. Given that almost every other retail centre in the UK is predicted to have a drop in business rates, some respite was on the horizon for BHS. The fact remains that the current business rates regime has done nothing to stimulate healthy high streets.”
Colliers is still campaigning for genuine business rates reform including the need to offer more funding to the Valuation Office Agency (VOA) so it can deal with the estimated 280,000 outstanding business rates appeals in the system.
Colliers Manifesto for Business Rates Reform:
1. More frequent revaluations, three-yearly, at least, by 2023;
2. Increase funding for VOA in order to deal with existing appeals’ backlog;
3. Release VOA from pressure exerted by local councils and HM Treasury;
4. Introduce a register of appeals professionals – removing the ‘cowboy’ element;
5. Iron out inequalities where small business pays a higher proportion in business rates;
6. Root and branch reform of current business rates exemptions and reliefs.
