Letter to the UK Government asking for help slightly O/T

[Adrian_Stiff]

I wrote to our MP today asking them to consider helping out. To put things into perspective A golf club-hotel-pub-sports club-resturant-holiday cottage-holiday business would have received a grant based on the following rateable value.
Up to £15,000 rateable value receives a grant of £10,000 per property
From £15,001 up to £50,999 rateable value receives a grant of £25,000 per property
From £51,000 onwards you get nothing. Most UK golf clubs are in this bracket.


I have been advised to write to you hoping that you could help our situation.
 
We are a golf course with some hotel rooms, conference rooms and we cater for weddings, wakes and parties. As you can imagine our business has been devastated with the pandemic. We have had 290 bookings cancel many are worth in excess of £5000 each.
 
Our core business is stay and play golf and a typical phone call that I have received 100 times goes something like this …. “Hi Adrian its Bill Smith from Norwich, we/12 of us are meant to be with for the first weekend in October. The current situation is 3 of our group have definitely decided they are doing nothing in 2020 and 2 others are kind of waiting to see what happens. We have had a chat and thought perhaps we would postpone and come the same week next year”
 
Their position is understandable, they have been educated by the governments advice and a fair percentage are still shielding or shielding others or feel that they want to see either a vaccine or infection rates at a very low level before they venture out.
 
Our rateable value is £108,000 and therefore is over the £51,000 threshold for receiving a grant. We don’t understand why we have not been given a grant. Boris clearly stated “We will stand by you” when he gave his speech that we all had to do our bit. As time has passed we assumed the government would be doing something to help the tourism and leisure industry but nothing has been announced. We have started to think we may be given no help and left to die.
 
The government have given us a business rates holiday for one year £55,000 but we have been closed after all. We are a seasonal business the summer months are the times we can earn and the winters lose money. Our Staff are furloughed but as we understand will be unfurloughed in October when the scheme ends. October marks the end of our season so without help our staff would have be made redundant. Talking to others in our industry it would seem many are in the same position. We think many will not go to company xmas parties this year so there may be no December renaissance for many in this industry.
 
I wonder if you could consider this email and discuss my proposal below.
 
May I suggest that all leisure and tourist businesses with a rateable value above £51,000 be given a grant equal to their rates  that they pay and that the grant is paid in five equal monthly instalments, for us £11,000 throughout the winter months (after October and the conclusion of the furlough scheme) with a proviso that to receive the grant the company make nobody redundant and retain the staff that received furlough.
 
Your investment of ONE years business rates into these businesses will secure many jobs in a very troubled sector. Your investment will see the government reap the future benefits of business rates and other taxes rather than more establishments closing and less people unemployed.
 
To reiterate it will be the upcoming British Winter that will really test our industry. Many of us have not made the summer profits to cushion our wet and windy winters.
 
Stay Safe.
 

[Duncan Cheslett]

I agree entirely with your sentiments Adrian. Cavendish also has a rateable value over £50k so received no grant. £25k would have made a massive difference.


However, I wouldn’t hold your breathe. I suspect the government response will be “Bounce-back Loan”

[Thomas Dai]

Nothing lost by asking.
atb

[Jon Wiggett]

As a starting point the business rates set up in the UK is completely out of touch with the reality of today's business world. It is defunct and should be scrapped as it does more harm than good.


As far as I am aware, the reason that grants were paid to those businesses with rates less than £50K is that most of them get some kind of rates relief so a payment holiday would be of no use. I doubt with the exception of Castle Stuart and maybe Nairn and Dornoch that any of the clubs up here in the Highlands have rates exceeding £50K.

With the business rates holiday will you have to pay that at some point in the future?

[Adrian_Stiff]

As a starting point the business rates set up in the UK is completely out of touch with the reality of today's business world. It is defunct and should be scrapped as it does more harm than good.


As far as I am aware, the reason that grants were paid to those businesses with rates less than £50K is that most of them get some kind of rates relief so a payment holiday would be of no use. I doubt with the exception of Castle Stuart and maybe Nairn and Dornoch that any of the clubs up here in the Highlands have rates exceeding £50K.

With the business rates holiday will you have to pay that at some point in the future?

No its a one year relief. I have worded it wrongly saying its a holiday.
What do you think is a better way of tackling business rates for the government?

[Jon Wiggett]

There is a massive problem with business rates in the UK in that they are totally detached from the turnover/profit of the business. It would seem to me that a simpler/better way of doing it would be to have it linked to turnover of the business which would allow the bill to reflect the actual trading situation of the business.


With the grants. Businesses with rateable values of under £51K are usually in receipt of rates rebates making the rates relief in effect irrelevant. The grants were a way to help these companies through the worst of the pandemic. I am sure that those who support how it was done would say that in effect your business has had a grant of £108K but I would have more sympathy with your position as it does seem pretty unfair.[size=78%] [/size]

[Niall C]

Jon


As a property guy let me make a few comments regarding rates. To state the obvious, it's a property tax, and as a property tax it is based on the rental value of the property. The advantage of having a property tax from a Government perspective, is that the property isn't going anywhere so in general terms there should always be some form of tax revenue.


Compare this to corporation tax where in recent years we've seen many large multi-national companies use aggressive tax avoidance schemes to mitigate or even avoid paying tax. I've not seen any numbers but I would be prepared to lay a modest wager that the likes of Starbucks (shite coffee BTW), McDonalds, Microsoft, Amazon and even Trump, have paid more money by way of rates than they have corporation tax.


What you seem to be suggesting is that the property tax be based on the income/turnover (not sure which) of the occupier. Given these guys are already taking the piss, why would you allow them to do so even more ?


Niall 


 

[Jon Wiggett]

Niall,


if you are going to have a go at my post then at least base it on what I actually wrote.


Business rates are not based on the rental value of the property as it is supposed to be and in reality it bears little relation to this. The rates do not fluctuate to reflect the amount that is being paid by the tenant. They neither rise in line with increases in the rent nor do they fall when a tenant manage to successfully negotiate a reduction. They are based on the opinion of an expert who may visit or may just rely on information contained within a form that the owner was asked to fill out.


I fully respect your opinion as a 'property man' but can tell you as a 'business rates payer' that along with almost every other business owner my opinion is that the business rates (non domestic rates) are not fit for purpose. I fully agree that too many of the big firms getaway with paying too little.


I am not sure where you get 'income' from my post as it is never mentioned but yes I would suggest a straight turnover tax with no deductions possible. The problem with corporation tax is it is seemingly so easy to avoid which is clearly a problem with the system and not the basic tax itself. As much as you lament the lack of payment by the big companies of corporation tax I am sure that they think the same about 'non domestic rates' with the SME's of whom over 60% avoid paying some, most or all of it.


The answer surely is to have a simple, no reduction tax based on the actual trading of a company defined by the product handled in a tax area. No writing off against expenses and no 'well we do our work here but actually we all work out of a post box on a desert island'.


Jon

[Niall C]

Jon


No you didn't mention corporation tax or indeed taxing income but you suggested a tax based on turnover or profit and therefore I think my comparison to Corporation Tax is valid in that the issue remains the same. Let me take one example which is the average town High Street that has a mix of multi-national, national and independent retailers. What you seem to be imagining, and I'm sure you will correct me if I'm wrong, is that for the same shop the independent retailer would pay less rates than the national retailer who would then pay less than the multi-national, all based on respective turnover.


However multi-nationals and national chains are very adept at compartmentalizing different strands of the business into separate companies and indeed often hold the property assets in a separate company from the trading company, even to the extent that each shop unit is held in a separate company. The turnover for the company that actually holds the lease will therefore be less than the independent who holds the lease in their trading company.


As the owner of a small business I'm sure you'd think that unfair. Well on the basis that it's supposed to be a property tax I'd think it unfair that there would be any difference in the rates irrespective of who occupies it. You could of course do away with property rates all together but you have to replace them with something and given how easily the big boys can get away without paying their proper share as it is, I'd say what you are suggesting just plays into their hands even more.


I'm conscious that we are getting far removed from GCA so just let me make a couple of other points and then I'm finished. Contrary to what you say, opposition to rates is far from universal. Sure no one enjoys paying tax, but most grudgingly accept the principle and that property rates is a reasonable way of doing it even if not ideal. It is noticeable however that a lot of the high profile campaigners against it are the sort of retailers I've referred to. They complain about the high level of rates which is ironic given the level of rates is based on the rents they have agreed to pay (yes, rates are based on rental value).


The last point is this, is this not academic as far as you are concerned anyway as under the Small Business Bonus Scheme are you not eligible for 100% relief ?


Niall   

[Jon Wiggett]

Niall,


the example that you give about the high street is not what I was considering so lets just discard it. Under the present system the small sized, locally owned independent super market on the high street in Dingwall that turns over just shy of £2M pays more non domestic rates than Amazon does on the large warehouse besides the M90 (?) where its turnover is hundreds of millions. If you think this is fair and cannot see the unfairness of the current system then I suspect we need no longer discuss the subject.


As for my rates, yes I do get a rebate and whilst I do not pay as much as Adrian (an insane amount IMO) I do pay what I am required to and what the business should. How much are you paying in non domestic rates?


What I am suggesting is a turnover tax pure and simple with no get out clauses so your example of what is wrong with it is based on a different premise. It would be interesting to hear your own thoughts on the subject.

[Niall C]

Jon


I tell you what, let's not discard my example. Let's use one of the national or multi-national retailers I referred to and you tell me how you decide how much tax they pay and how you split it up between the various Council's that have one or more of that retailers units in their area ? Remember, rates are supposed to go towards paying for local services.


As for Amazon, that's my point, you say there T/O is hundreds of millions but where is that turnover being made ? When someone buys something through Amazon the point of sale isn't in Fife.


Niall

[Jon Wiggett]

Niall,


you never made an example relating to national or multi-national retailer you made a statement but please do explain how you think it works now and why this is fair if this is your opinion or put forward an alternative.


You are correct the point of sale is not Fife but then the value of the building to the company is not in the point of sale nor is a turnover tax a point of sale tax.


Jon

[Duncan Cheslett]

We already have a turnover tax. It's called VAT.


I guess you could increase the rate of VAT and abolish Business Rates. The problem there is that B2B operations would pay nothing and retail businesses would pay more.


The beauty of Rates is that it's easy to collect and impossible to avoid.

[Niall C]

Niall,


you never made an example relating to national or multi-national retailer you made a statement but please do explain how you think it works now and why this is fair if this is your opinion or put forward an alternative. It was you that referred to it has an example in post #9. It's also you that wants to abolish rates. I don't so why would I need to come up with an alternative ?


You are correct the point of sale is not Fife but then the value of the building to the company is not in the point of sale nor is a turnover tax a point of sale tax. And the value of the building to the company is reflected in the rent or capital value which in turn is the basis for the rates paid. So tell me again why you don't want a property tax ? 


Jon

[Niall C]

We already have a turnover tax. It's called VAT.


I guess you could increase the rate of VAT and abolish Business Rates. The problem there is that B2B operations would pay nothing and retail businesses would pay more.


The beauty of Rates is that it's easy to collect and impossible to avoid.

Duncan

All good points. The other point about rates is that it is by it's nature a local tax and linked to local spending. Now I knew this rating surveyor once who was right into his golf course architecture............

Niall

[Duncan Cheslett]

In England Business Rates is collected by the local authority but handed over in its entirety to central government. The LA then receives a grant back from the government - supposedly based upon local needs.


Is the system different in Scotland?

[Jon Wiggett]

Niall,


you never made an example relating to national or multi-national retailer you made a statement but please do explain how you think it works now and why this is fair if this is your opinion or put forward an alternative. It was you that referred to it has an example in post #9. Which was in response to to your mentioned it in post #6. It's also you that wants to abolish rates. I don't so why would I need to come up with an alternative ?

Fair point only, what you claim non domestic rates to be is not correct in practice so your reasons for supporting it are based on a falsehood .



You are correct the point of sale is not Fife but then the value of the building to the company is not in the point of sale nor is a turnover tax a point of sale tax. And the value of the building to the company is reflected in the rent or capital value which in turn is the basis for the rates paid. So tell me again why you don't want a property tax ? 


Again yes in theory but incorrect in reality.


Jon

If non domestic rates worked in practice as they are supposed to then I would be more in favour of them but they neither reflect the reality of the rentable worth of the property nor that of the business.

[Jon Wiggett]

In England Business Rates is collected by the local authority but handed over in its entirety to central government. The LA then receives a grant back from the government - supposedly based upon local needs.


Is the system different in Scotland?

No. The system is in essence the same with the exception that Holyrood also add a levy to the high banded properties which it keeps for itself.


I agree with you assertion on VAT except of course it starts above a threshold and is a complicated form of turnover tax. I would favour a tax which was a fraction of a % with no claw back.


Nice plaque on the tee (6th?) by the way.


Jon

[Adrian_Stiff]

This has gone way off topic and as usual started the usual row.

Aside, Scottish domestic rates have some pretty shitty rules which certainly don't happen in England.


I paid domestic rates at 'twice the standard rate' on a property that was fire damaged that I could not repair because the building was attached to another whose owners would not pay their bit.


No leeway. Unoccupied property pays rates at 200%.


On the original matter I have had response from the MP that they are at least discussing it.

[Mark Chaplin]

Adrian you must be happy with today’s measures? I just hope unlike the last time this happened price increases aren’t used to diminish the reduction in VAT.

[Adrian_Stiff]

Adrian you must be happy with today’s measures? I just hope unlike the last time this happened price increases aren’t used to diminish the reduction in VAT.

No, very unhappy really.....its stay in if you can but go out in August on a Monday, Tuesday or Wednesday where hopefully you can mix with hundreds of other people claiming their £10 Bargain voucher. Of course you still can't go to a wedding or funeral if there are 31 of you. More nonsense from the Zucker brothers! Vat reduction is good but much of our 2020 business is cancelled, we are at 299 cancellations now...The government have massively misunderstood the economic catastrophe, 25% of the country are frightened to do anything, they want the virus gone before they go out....somebody yesterday said we are having three winters on the trott, that makes a lot of sense though its incredible disappointment to the tourist industry in the UK because we have so little winter trade.

[Duncan Cheslett]

I am getting increasingly pessimistic about either this virus going away or there being a vaccine developed. My suspicion is that we are simply going to have to get used to it as a permanent fact of life and adapt accordingly.


If that is the case the looming economic catastrophe will have been precipitated for nothing. Bankrupting ourselves and our children/grandchildren within the first few months of a long-term situation is going to look rather silly in retrospect.


I do hope I'm wrong...

[Adrian_Stiff]

I am getting increasingly pessimistic about either this virus going away or there being a vaccine developed. My suspicion is that we are simply going to have to get used to it as a permanent fact of life and adapt accordingly.


If that is the case the looming economic catastrophe will have been precipitated for nothing. Bankrupting ourselves and our children/grandchildren within the first few months of a long-term situation is going to look rather silly in retrospect.


I do hope I'm wrong...

I think you are wrong and why I say that is other countries have cleared it up. I don't think the USA are far behind the United Kingdom for being champion for the handling of the whole episode. It need strength and clarity from the start and certainly here we got none of that. We will get there eventually but I expect even the South American countries where its at a high now will still beat us to days of zero deaths. Now go back upstairs wash your hands and sing happy birthday.

[Kalen Braley]

Adrian,

Not sure what you mean exactly by "champion", but by almost any measure it is certainly the US.

Despite having only 4.3% of the worlds population, they have 25.8% of the cases and our numbers are currently in another massive upward surge.  #Winning!

[Jon Wiggett]

What we do know about this virus is it is part of the Corona string for which no vaccine has been found despite much research meaning the likelihood of a vaccine are quite small despite all the hype to the contrary. It does infect all ages just younger people do not die at anything like the same rate from the first wave. However, as studies so far show that only about 6% of those infected test positive for antibodies shortly after having the virus any resistance is likely short lived.


Covid-19 is different to most other flus as it affects both lungs and the signs are that those that are strongly affect have permanent damage to their lungs meaning they are more likely to die in any further infection. If it doesn't get you the first time it might the second, third,.....


For those pushing the idea that it might go away and doing nothing is smart I hope you are right though right now I would not want to be in certain areas of the US or Brazil.