The Head of the Treasury Select Committee, Nicky Morgan, has branded the sending of backdated business rates bills to small businesses in England and Wales as ‘particularly unfair’.
Dubbed the ‘staircase tax’, businesses which occupy space on multiple floors of a communal commercial property now receive separate business rates bills for each floor they occupy, where the areas separating the offices are communal (for example lifts, corridors and stairs). Some firms in England and Wales have seen their business rates rise significantly as a result.
The Valuation Office Agency (VOA) determines business rates for firms in England and Wales, and made the changes as a result of a previous Supreme Court ruling which considered how different storeys under common occupation in the same block are assessed for business rates purposes.
Business rates are calculated separately in Scotland, using the rateable value which is set by a local assessor, and the ‘poundage rate’ which is set by the Scottish government. For 2017/18, a Large Business Supplement of 2.6p is being added to all business properties with a rateable value of £51,000 or more.
Commenting on the so-called staircase tax, Ms Morgan said: ‘It seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private.
‘It seems particularly unfair for the increase in rates to be backdated.’
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘No small business should receive a sudden tax hike of 5,000% simply because a workplace has been separated, for years, by a communal area, stairway or lift.
‘Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises.
‘This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently – to correct this defect in the UK tax system.’