Apr 1, 2008 - document covers the business rate for Markets held on the high street that dot not enjoy market rights, an
Business Rates A draft version of this document was provided to G Wilson in to contribute to NABMA’s argument. I believe that its document was instrumental in putting across the industry’s point of view to the evaluation officer. This document covers the business rate for Markets held on the high street that dot not enjoy market rights, and are not established under a grant, an enactment and are not statutory. It only covers markets run under the Local Government Miscellaneous Provision Act, the London Act, the City of Westminster Act and perhaps the markets established under the Food Act (if on the highway). 1) Taken from the gov.uk website: ‘Business rates are worked out based on your property’s ‘rateable value’ this is its open market rental value on 1 April 2008, based on an estimate by the Valuation Office Agency’ end of quote. Please take notice that it’s not the activity taking place on the property that is rateable, but the rental value of the property. 2) When a commercial activity is taking place on the public highway, or within 7 meters of a street as defined in the Local Government Miscellaneous Provision Act 1982. A license or consent is required. 3) The above consent does not correspond to the rental value of the property as officially this is not a commercial property it is the public highway. The foundation of the legislation is the same as car parking. Car parks that are built on private property (not the high street) are charging a rent, the rate of which is set at the discretion property owner; while, officially at least, the charge of parking space on the high street, is limited to cost related to ease and manage the traffic. 4) What is understood here, is that license and consent do not give the same rights and security as the rental of a stall (at statutory markets)? As in case of a street trading license, the local authorities can de-designate a street and revoke all the related licenses in the process. Highway can also at any time reclaim the land for redevelopment or public use; this is also a reason that the stalls are required to be temporary structure. Public access has priority over commercial activities; this is not with a statutory market or market established by a grant or an enactment order, in which the market activities are taking precedent over the public use. 5) When individual street trading licenses are issued, and there are four stalls or less in the same concourse, this does not constitute a retail market. But the activity taking place is still retailing from a stall. So, when at the same location, and a Christmas market or a food festival takes place, does the rental value of the property change? No. It is still the same property and therefore has the same value. Is it because it is accepted that individual street traders are always small business? No, Sky, BT, EE and many other large service providers apply for temporary street trading licenses every day somewhere across the country, they are not small businesses, unlike the majority of Christmas stall holders for example. 6) In the case of a Christmas market or large event taking place on the Highway using the same street otherwise occupied by individual street license holders, the pitch fee will grow dramatically, but not the rent of the land. If it is a public highway, there is still no recognised commercial value attached to it. The premium of the pitch fee is due to the nature of the business exploiting that land; the services provided by the operator. I don’t think that Primark will have to pay higher business rates on the sole fact that they are making better use of the land than the previous clothes retailer and regardless of the rental value of the property.
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7) In the market industry, the majority of businesses (I imagine about 90%) will be eligible for small business rate relief, charging the operator is just, using an intermediary to charge these businesses, regardless of the purpose of the legislation.
The above can only lead to one conclusion, in its current format, the evaluation officer is not applying the business rate accordingly to the rental market value of the property, but effectively taxing the good will of the market operator, which is already covered by Corporation Tax and VAT charges. Considering the above, and to be consistent with the legislation, we need to ask two questions: 1) Is it possible to evaluate the rentable values of a designated street trading area? I believe it is and it should be, but first, the legislation will have to change, and evaluation officers or the government will have to establish the commercial rental value of these designated spaces. When that usage is secondary to public use, no service facilities are provided, occupancy is subject to the weather conditions, and as in many cases, when the occupation is intermittent. 2) Can business rate be calculated solely based on that evaluation? It may prove to be a highly difficult scheme to implement, as it will put great administrative pressure on local authorities while reducing the flexibility the industry requires. In example: (figure are hypothetical) A local authority designates 4 individuals, adjacent pitches in a street (A) which enjoys a huge footfall. iIn a great commercial location Each pitch has been evaluated at £11,000 a year, assuming full occupancy. At a separate location, street (B) an additional 20 pitches have been designated, but that street experiences very little footfall unless there is an event, so each pitch is evaluated at £5,500 for the full year. John Smith’s, fruit and vegetables stall needs two pitches to operate, but there is only space available in street (A) on Friday and Saturday. The pitches are occupied by other 2 individual stalls Max the Butcher and Bill’s Flowers for the rest of the week. So, during the five remaining days, John trades from two pitches in street B. So, when John trades from two pitches on street (A) the rentable value of the property is £22,000 per year, and on pro rata, he should be paying business rates. But when he is trading from pitches in street (B) he does not have to, because he is under the small business relief. The same goes for the two other individual pitches trading in street (A) since annually, the sum of the annual rental value for their occupation of the individual pitches is below threshold, qualifying them for the small business relief. It seems to me that the only time business rates can be added is when a pitch is hired out permanently (in case of permanent licenses). Or perhaps, (as it is the case for B&B to assess if subject to VAT or not) the number of days the pitches are available for rent (over 140 days for B&B) could determinate if the pitch is subject to business rate or not. But the complexity of monitoring such a scheme in absence of a proper digital support will probably cost more than it will generate in income. Philippe basset
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