Rural business faces bankruptcy after enormous rates rise

The owner of a Lancashire equestrian centre could be facing bankruptcy after business rates skyrocketed by more than 1,000 per cent overnight.

Tuesday, 9th May 2017, 7:00 am
Updated Sunday, 4th June 2017, 9:43 pm
Derek Bolton of Bluebell Liveries

Derek Bolton, of Bluebell Liveries, now has to fork out more than £8,000 a year – up from just £564.

The 54-year-old, who has run the business in Trigg Lane, Heapey, near Chorley, for almost 25 years, said the change could see his livelihood go down the pan. He added: “It is outrageous, my business can’t afford that. It will bankrupt me.”

It comes after a major overhaul to business rates across the country.

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Across Lancashire it means many firms will see their rates reduced but others have been left with massive rises.

The overhaul of commercial tax charges, which were introduced in April, has seen his rates jump more than 1,000 percent.

Business rates are based on the value of the property a business is located in – not how much profit the firm makes.

The overhaul, which was introduced on April 1, sets rates according to the value of the premises in 2015.

Derek, who runs Bluebell Liveries in Heapey, near Chorley, now has to fork out £8,250 annually - up from just £564 the previous year.

He says the changes could see his business, which is also a stud yard, go down the pan.

“Its a serious life-changing situation,” said Derek, who is the full-time carer of his 85-year-old mother who has advanced dementia. “Some idiot in Whitehall has just thought, ‘Oh let’s slap it on’.

“I can’t get my head round how they think.

“Its outrageous, my business can’t afford that. It will bankrupt me.”

Derek, 54, who has owned his livery yard in Trigg Lane for the last 23 years has been eligible for small business rates relief in the past. His business was also eligible for rural rates relief.

In the changes that the chancellor announced in the budget last year, which came into force as of April this year, Derek’s livery and stud yard was no longer eligible for the relief.

With the flick of a switch, the rateable value of Derek’s property has gone from £7,000 to £22,369.

“It wipes out all my profit,” said Derek. “I work seven days a week, 12 hours a day.

“I will have to close so I will lose all my credit to the bank.”

“The value of my property has plummeted and a business like Amazon has just had its rates reduced.”

In 2014 Derek had a difficult year business-wise and his income amounted to just over £10,000.

He has to shower and cook in his mother’s house because his shower flooded last year leaving a hole in his ceiling and his cooker does not work properly. He also has no hot running water because he needs a new boiler.

Although he is eligible for transitional relief for the first year and there is a cap on his payments for two months, Derek still says ultimately his business will not be able to absorb the costs.

He is not the only owner of a livery yard who has seen their business rates hiked since April.

Dave and Janet Berry will have to pay 69 per cent more for their yard, Chorley Equestrian Centre in Chapel Lane, Heapey.

They are also saying that the rates could mean they shut up shop.

“For us it could put us out of business,” said Dave. “It’s our place, we’ve been here 32 years. We built it up from nothing.”

Call for a rates system that is ‘fit for purpose’

With another General Election looming the Federation of Small Business (FSB) has launched its manifesto calling for a ‘business rates system that is fit for purpose’.

The manifesto states: “The non-domestic rates system, as it stands, is an unfair and regressive tax that takes no account of a firm’s ability to pay.

“A business must pay £1 in business rates before its earns £1 in turnover, let alone £1 in profit.

“A property-based tax by its nature unfairly targets businesses with premises, and businesses in prime locations (such as high streets).

“Infrequent or delayed revaluations merely store up trouble, exacerbating a property tax that already lags behind the economic cycle.”

Meanwhile a Lancashire business leader has also urged the winner of next month’s General Election to make £300m of relief to small businesses a priority.

Norman Tenray, the managing director of Longridge-based building supplies’ firm, OBAS UK, said the delay to the package promised by the Government would hurt firms across the county.

It had been hoped a support fund would be set up following the end of a consultation into soaring rates in some parts of the country.

However, the Department for Communities and Local Government has confirmed it will be up to the next government to publish its response to the findings.

Mr Tenray said: “There is potential for this delay to last several months and that is simply unacceptable to businesses struggling with the impact of rates revaluation.

“The fund promised to protect affected businesses was ready for implementation and now, due to no fault of their own, those hardest hit will be the ones which shoulder the burden.

“I would call on whichever political party forms the next Government to make this a priority and allow small businesses in places like Lancashire to prosper and grow.”

Many small firms have seen their bills plummet

For many the government’s overhaul in business rates has seen their bills plummet - or even disappear.

The government says that nearly 600,000 small businesses will be taken out of paying business rates altogether, because the rateable value of their business falls below £12,000 a year.

All businesses with properties that have a rateable value over £12,000 must pay rates and relief is available for businesses just over the £12,000 threshold.

MJH Accountants, which has an office space in Woodplumpton Road, Fulwood, is one of the winners from the changes.

Managing director Mark Hall said: “Our rates have actually come down. This year our rateable value is £7,000 and last year it was £7,600.

“So I’ve gone from paying about a grand a year to paying nothing.”

Elsewhere in central Preston Ham & Jam coffee shop in Lancaster Road still has to cough up £1,000 a month in rates.

Although owner of the cafe, Richard Lowthian’s rates have come down, he still finds the bills a tough pill to swallow.

Richard, whose 145 square-metre cafe has been open for about 16 months, said: “Our rateable value was £24,000 and that’s come down to £17,000, so it’s come down - we’re now paying about £1,000 a month in rates.

“I can’t really compare though because we won a competition when we opened which meant that for the first 12 months our rates were paid for.

“It’s a big bill that we have to pay now though, a big chunk of cash. Business rates and rent are our two biggest outgoings.

“In the high street in the city centre you are paying a premium whereas in a small office space in the middle of the country side you’re probably not paying anything.”

The Chamber of Commerce for North & Western Lancashire based in Fulwood has found that many of its members have welcomed the revaluation because their rates have dropped.

Babs Murphy, chief executive of the Chamber of Commerce said: “With any business rates revaluation there will always be winners and losers.

“The reduction in business rates however is great news for thousands of small businesses many of whom have been taken out of the system altogether.

“Last year we were pleased that the chancellor heeded our calls to avoid higher business taxes and costs, and moved to lower them in a number of areas.

“The measures taken has been viewed by many of our members as a welcome and important step on the road to essential reform.”

In South Ribble the feeling is similar.

Leader of the borough council, Coun Peter Mullineaux, said: “Following a recent re-valuation of rateable values right across the country, businesses in South Ribble are in fact set to save an average of 10 per cent when compared to the previous financial year, although the re-valuation will affect each business differently.”

London as a region is the only net loser from the revaluation. Businesses in the capital will see an average increase of 11 per cent, but some areas of central London will see far greater increases.

For businesses hit badly in the North West the £300m relief package will see £22.2m being allocated to the region.