Business

Rates reform needs to get 'back in business' before it's too late

Former finance minister Máirtín Ó Muilleoir pictured last year urging businesses to take advantage of rates relief

AS our politicians struggle to break the deadlock and restore a devolved Executive, we're only too familiar with headlines about spiralling waiting lists and depleted classroom supplies.

The impact of a caretaker budget has taken its toll on public services already under financial strain. Faced with little choice, the business community has largely taken the pragmatic approach of getting on with things. But for it too, the paralysis is beginning to bite.

The issue of business rates is a growing source of frustration for small and medium sized enterprises.

The “Back In Business” scheme, which allowed businesses who moved into premises - previously used for retail purposes and unoccupied for 12 months or more - a 50 per cent rates reduction, has been placed in limbo since the suspension of the institutions.

The initiative, originally introduced in 2012 with the aim of regenerating high streets and core shopping areas, has assisted around 500 businesses and was due to be reviewed in March this year.

The continuation of the scheme had not been agreed by the devolved government prior to the political impasse. This has resulted in an unsatisfactory situation where Land & Property Services continue to accept applications for the relief, but is unable to process them until a decision is made by Stormont. This is obviously causing significant uncertainty amongst business and in some cases could threaten their viability.

It is important to bear in mind that the Small Business Rate Relief scheme is not currently affected by the suspension.

Eligibility for this separate scheme is based on the net annual value (NAV) of the business property. The scheme, which provides for rates reliefs between 20 and 50 per cent depending on the NAV, had been extended until March 31 2018 when Stormont was functioning.

But if the political stalemate continues for a prolonged period, uncertainty around the future availability of this relief will grow. Small businesses will have difficulty planning their budgets and investing if they do not know the extent of their future rates liability. This would affect many more businesses than currently impacted by the suspension of the Back in Business scheme.

There is a wider context to these issues though. Prior to suspension, business rates was one of those issues where the Executive had displayed an appetite for comprehensive reform.

Last November Finance Minister Máirtín Ó Muilleoir announced proposals labelled "A Rates Rethink: Spurring Economic Growth" described by the Minister as “the biggest package of reforms to our rates system for a generation”.

The proposals, which included replacing the Small Business Rate Relief scheme with a £22m fund for the retail and hospitality sectors, were to be put forward for public consultation before going through the Executive and the Assembly.

However that process was interrupted by the collapse of the institutions in January 2017 and businesses have been left to speculate about which changes will actually materialise and the timeframe for their delivery.

One thing is clear - whether we have the restoration of devolved government, or the imposition of direct rule, the business community will want the issue of non-domestic rates to be high on the agenda of the incoming minister.

:: Mark Jameson is senior associate at Pinsent Masons

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