Staircase tax putting unnecessary pressure on small businesses

Small firms across England and Wales are being hit with backdated business rates hikes due to changes in the way the Valuation Office Agency (VOA) assesses staircases.

Previously, firms that occupied multiple floors within a commercial property would receive a single business rates bill covering all occupied areas. Businesses now receive individual rates bills for each floor they occupy, provided the areas between the floors are communal, following a Supreme Court Ruling

Firms will continue to receive a single rates bill if they occupy multiple floors but can access them via a private staircase or walkway. The move sees businesses on different floors in a mixed-use building being charged as two separate premises and will result in substantially increased business rates for thousands of firms. What’s more, charges are backdated to April 2015 in England and April 2010 in Wales. 

Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “This latest twist in the business rates tale serves as yet another reminder of what a regressive system our entrepreneurs are faced with when it comes to this tax.

“How can it be right that you’re hit with a massively inflated bill simply because the staircase you use is shared and not private? And these bills are backdated, stinging firms that are still waiting on delivery of relief measures announced more than five months ago. 

“Enough is enough. Any sensible person can see that the business rates regime is fundamentally flawed, penalising firms before they made their first penny in turnover, let alone profit. A fundamental review of the tax is long overdue.”

HM Revenue & Customs (HMRC) officials enforcing the staircase tax have admitted that they have yet to resolve one in five of all business rate appeals across England and Wales – dating as far back as 2010.

This has brought heavy criticism with Ex-Business Secretary, Sir Vince Cable, who said: “This underlines the unfairness and irrationality of the business rates system. Instead of hitting small businesses with an unfair staircase tax, the Government should focus on addressing this massive back-log of appeals. It’s unacceptable that a quarter of a million businesses are being left in the lurch.”

Chancellor of the Exchequer, Philip Hammond, now faces mounting pressure to scrap the new tax. Commons Treasury committee chief Nicky Morgan, who worked alongside Mr Hammond in the cabinet, led the calls for him to intervene.  

She said: “I certainly support the FSB on this - it can’t be right for businesses to suddenly be asked to find money for something they didn’t know they might be liable for.”

Are you a small business owner? TaxAssist Accountants are here to help you with a range of services. Call us today on 01636 402 425 or use our online contact form to get in touch. 

Date published 25 Aug 2017 | Last updated 25 Aug 2017