Business rate reviews and effects on SME’s
Business rate reviews and effects on SME’s – The View of an Insolvency Practitioner
In this article, Clive Fortis of Antony Batty & Company takes a look at Business Rate Reviews and the likely effect that the long overdue review will have on SMEs; from the point of view of an insolvency practitioner.
“At Antony Batty we have recently dealt with numerous insolvencies of retail outlets, including a long-established cake shop and a number of restaurants. Insolvencies happen for a number of reasons: cash flow problems, creditor pressure and HMRC arrears to name just a few. The underlying causes of these problems are also many and varied, with the outcome of the 2017 business rate review likely to have a negative out come for some businesses.
On 1 April 2017 councils will undertake a review of business rates across Great Britain. The revaluation of rates is meant to occur every 5 years with the last such assessment being undertaken in 2010. The scheduled review in 2015 was delayed for 2 years. It is now anticipated that the overdue rate revaluation may have an adverse effect on thousands of businesses.”
What do Businesses Expect to See?
The Federation of Small Businesses has indicated that approximately 36% of small businesses expect to see an increase, with 44% expecting these increases to exceed £1,000 per annum. With business rates being based on rateable values, by bringing local rental calculations up to date there will inevitably be winners and losers with some areas expecting to see a decline in rateable values.
For businesses expecting to see a rise in their business rates this could delay anticipated investment or even force cuts in overheads and staffing. To alleviate the pressure on the many businesses which will be harder hit than others, Theresa May has announced that £3.6 billion will be made available for firms that are “particularly affected” by the reforms.
The Insolvency Practitioners Can Help
SMEs can be particularly vulnerable to unexpected increases in costs, one of which would be a significant increase in business rates. If you find your business is facing financial difficulties or even insolvency as a result of such an increase, contact us or call is on 0208 088 0633 for an initial discussion. The sooner you make contact the more we can do to help.