Rates rethink welcomed by small business
Small businesses have welcomed the news that Nick Raynsford, the Government's Local Government Minister, intends to look again at the proposed Small Business Rates Relief scheme.
The Forum of Private Business (FPB) has been campaigning for the past year to raise awareness of the fact that the original proposals were unlikely to assist, what has long been one of the key concerns of small businesses, and indeed were likely to penalise many small businesses.
Scotland
The FPB said: "We would hope that the Government will at least introduce comparative thresholds to the scheme as it is administered in Scotland to avoid creating an unfair competitive advantage for Scottish businesses."
In Scotland relief is given to all businesses with a Rateable Value (RV) of up to £3,000, who receive a 50 per cent reduction in their rates bills, those with an RV of between £3,000 - £10,000 receive relief on a sliding scale and those businesses with an RV between £10,000 - £25,000 receive no relief but also avoid a surcharge (known as a 'buffer scheme').
Any business with an RV above £25,000 is liable to be surcharged under the scheme.
The FPB was critical of the approach by the CBI on this issue. The FPB said: "Given that there are only 10,000 plcs in comparison to 3.8 million small businesses, it is unfortunate that the CBI, who claim to represent all businesses, see the creation of a 'buffer scheme' as being detrimental to business in general.
"The CBI have been reported as stating that it believes 'this will not significantly benefit smaller firms'. Given that the average rateable value is £15,000 per annum for SMEs the original scheme would have resulted in over one million SMEs paying a surcharge because of their high average RV.
"If the UK government adopts the Scottish 'buffer scheme' of £25,000 RV a significant number of SMEs, in the region of 90 per cent, will actually benefit from the scheme."
Compliance costs
Small businesses already face far higher compliance costs for all taxes than their larger counterparts. According to the European Commission the cost of tax compliance for large businesses is 0.2 per cent of turnover compared to 30 per cent of turnover for SMEs.