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26 February 2021 0 Comments
Posted in Retail & Leisure

Delayed decision on business rates creates window to design a bold new tax regime

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The government has delayed making a decision on introducing a new tax on online sales in its March Budget following dramatic growth in online sales during the COVID pandemic. It had been widely anticipated that this would be accompanied by a shake-up of the business rates regime and throw a much-needed lifeline to struggling high streets.

We now expect the current business rates holiday to be extended, says retail lawyers Royds Withy King, and we hope this means that the government will take on board calls for a simple sales tax that will extend to all retailers and be matched by the scrapping of business rates.

Vicky Hernandez, a Partner in the Real Estate team at Royds Withy King and whose clients have included AllSaints, Ladbrokes, Moss Bros, The Body Shop and Arcadia Group, explains.

“The introduction of an online sales tax has the potential to polarise our fragmented retail landscape further. It would not be helpful if successful online retailers were targeted with a so-called ‘Amazon tax’ and retailers with hybrid models extending to both bricks and mortar and online sales ended up stuck with both business rates to pay and an element of online sales tax, which could be near impossible to calculate.

“A flat tax on all sales that is countered by the scrapping of business rates for all retailers would be preferrable. The scrapping of business rates could be achieved in a targeted way using changes introduced to the use classes order in September 2020.

“There will, of course, be challenges with the boundaries between online and offline sales often blurred, yet these are addressed regularly by landlords in turnover rent leases. Government, landlords, local authorities, retail tenants and their advisers should work together to explore all opportunities.

“Scrapping business rates would also provide the opportunity to reimagine high streets, helping to protect the valuable sense of community that exists and needs to be nurtured.”

For more information contact Vicky or our specialised Retail Sector team

0800 923 2073     Email usenquiries@roydswithyking.com

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