Business Rates reform and how it affects us
The 2017 Business Rates reform is set to have a huge negative impact on many businesses, including us at Woodfarm. Here’s the facts surrounding ours.
The rationale behind this Blog Post is to share the impact on small businesses, including Woodfarm, for those interested in what the Government is planning, although as I write it seems as though they may be about to actually start listening to those of us who have pointed out factually how unfair it is.
When I started this business I personally purchased the derelict Woodfarm House and the crumbling Granary Barn set in two acres of the Suffolk countryside. I spent a year renovating Woodfarm House whilst trying to get funding and finance for the rest of my plans to build this holiday cottage development. When I finally managed to secure some money I was given no choice but to set up a separate limited company with which I was to borrow money for the conversion of The Granary Barn and the building of the other barns, so I operate Woodfarm House as a sole trader and Woodfarm Barns with my limited company. They are marketed as one entity though of course.
It is important that I tell you this as they are rated separately for business rates. As I understand it, business rates was always a tax on the size and value of the property. Unfortunately with the new reform the government are now seemingly taxing businesses on their turnover as well. This means we pay:
- VAT on our sales as every penny guests pay is subject to us handing over the VAT element
- Corporation Tax on our sales
- And now a further Sales Tax via our business rates!
I fully accept that the more money we make, the more we should pay in taxes, but not with a new sales tax!
This is where the system falls apart firstly, but it also falls apart in the way in which it seems to have stuck pins in a map to decide who pays more, as there is no parity between similar businesses in the same area!
My current Rateable Values are £5,600 for Woodfarm House and £6,500 for Woodfarm Barns. This has always meant that we have had small business rates relief. However, my new rateable values are going up as follows – Woodfarm House is rising to £6,700 and Woodfarm Barns is rising to £16,000!!!! Where did that come from?!?!?!
My own two businesses are seeing a rise of 20% (steep in its right) and 162%!!!! So my own two businesses are poles apart yet they are next door to each other!
Now what I’ll tackle next is Sajid Javid MP who has accused those of us involved in the current furore of “half truths” and “distortion of the facts”. Well, let me clear that up with screenshots of my business rates valuations via screenshots from the VOA website!
This is going to cripple some small businesses, not to mention large businesses who are seeing monumental rises. It will not put us out of business but it’ll hurt as we will no longer receive any rates relief. I fought to build this business for years and have only just started reaping any rewards in the last couple of years. I don’t want any sympathy, I just want to pair fairly along with everyone else. The defence by the Government is that 75% of businesses are going to pay the same business rates that they were, or less! So why are 25% of us being hammered? Surely, they should just put everyone’s up 10 or 15% to claw lots of money in?
Am I being a bit thick here but is a system where 75% of those being taxed stay the same or decrease and 25% are facing 100, 200, 300 and in some cases, 400% increases fair? Surely when they came up with this someone must have tugged at Philip Hammond’s elbow and said “Err Phil……”
Why are they penalising those of us who are being successful at what we do with our properties when we already pay two other Sales Taxes? Surely the council tax for domestic properties will always be rated on the size of the property, not how hard you party in it?
As I write we are a shocking 30 days away from this kicking in and we still don’t have our bills so we don’t actually know what we are paying! A business couldn’t survive if it operated in this way! All we have is “estimates”. Here’s mine;
With screenshots from the VOA website I don’t think I’m distorting the truth am I Mr Javid? I think you’ll find they are the whole truths, not half.
I will personally be around £6,000 worse off. This may not sound a lot in the grand scheme of things but when it comes directly out of your pocket and you have worked hard to build what you have, trust me, it hurts! It hurts more because some others are paying less!
Unfortunately we are fighting for small businesses against a government with no commercial acumen. I have approached my MP, Dr Daniel Poulter, with whom I have a history of being let down by and he has stayed true to form. When I wrote asking him to get involved he simply replied giving me the address of my VOA and suggested I appeal!
Nearby Southwold are being severely hit and facing an average rise of 177%. Their MP, Therese Coffey is backing them. I have a friend who owns six holiday cottages and he is being faced with a similar increase to me and is also being supported by his MP, James Cartlidge. Interestingly just last week, Dr Poulter wrote to me to say he couldn’t do anything, yet in the same letter said he had written to the VOA a couple of weeks ago. Yet, he had already told me he couldn’t do anything. I have written back to him to ask why on earth, when I am taking him task over this, would he fail to tell me he had written to the VOA, when that’s what I’m asking him to do!?!?! Methinks there may be some skulduggery afoot there, which wouldn’t be the first time from an MP. I’m also now waiting for a reply from Jane Ellison MP, who is responsible for the VOA.
I was part of a discussion on this last week on BBC Radio Five Live and since then (not because of me, I’m sure!) things are hotting up and as I listen to that same radio station, there is much debate over this now and it looks like those in power are possibly waking up and admitting they may have got this a little wrong. The main issue of the debate was that it has been discovered that although we are all being told to appeal, the wording of the appeals process is such that any appeal will simply be ignored and we will have to pay! We’ll see what happens.
One of the most frustrating parts of this is the sheer amount of time I, and others like me, are having to spend on this matter, instead of doing what we do best. Working on our businesses! Personally this is taking time away from my businesses, which due to my efforts and those of the amazing team I have around me, now contributes around £1m to the local economy. To clarify, that is not to me but the economy as a whole due to the spend of my guests. If anyone would like to know how this is derived, do get in touch and I will explain it but it is far too weighty to include in this Blog Post.
I apologise for taking up so much of your time with this but if you are a small business owner yourself you’ll know what many of us are going through. There is so much more I could say. Feel free to get in touch with me if you are up against this too.