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Struggling Retailers Could Qualify For Rates Relief Warns Expert

Monday, 21 November 2011

Struggling retailers could qualify for significant rate relief under existing laws if traditional high streets continue to be overtaken by boarded up units and charity shops, an industry expert has warned.

Lobby groups such as the British Retail Consortium and The Booksellers Association have called on the Government to use this month's mini-budget to give retailers extensive tax breaks in a bid to revive the ailing sector.

But experts have warned that retailers such as bookshops could qualify for significant rate relief already under rules surrounding what is known as material changes in circumstances.

Nick Sercombe, of business rate specialist, Ruddle Merz, said those retailers which have survived so far could claim that their businesses are being hit by the fact that traditional high streets have been overcome by empty units and charity shops.

He said: "Any retailer could argue that high streets full of charity stores are less attractive places to shop, which then deters their customers from visiting.

"But stores such as bookshops, which are often in direct competition with charity units, have an even more compelling case and could claim relief based on that being a material change of circumstances."

If successful, it could lead to stores trading almost for free as many landlords have already agreed nominal £1-a-year rents simply to avoid their premises becoming empty, for which property owners are liable for business rates.

Shopping guru, Mary Portas, sparked controversy by claiming there were too many charity shops and that start-up retailers should be given the same tax breaks in a creative attempt to breathe fresh life into Britain's ailing town centres.

Portas, who is also the author of a forthcoming government report into the future of the British high street commissioned by Prime Minister, David Cameron, is thought to have also proposed making it easier for supermarkets to set up in town centres and make it harder to build new retail parks.

Mr Sercombe said: "The Government needs to think of creative ideas to breathe fresh life into the high street simply to avoid traditional town centres dying out.

"But in the meantime, retailers such as book shops could protect themselves by claiming temporary discounts on their biggest existing outgoings - and that includes business rates.

"Businesses are suffering right now and, in high streets like Margate, Wandsworth, Blackpool and Rotherham, where occupancy rates are among the worst in the country, the council needs to recognise that those who remain need help.

"Giving rate relief like this across the whole country may cost millions, but the cost of failing to act could be much worse. Once those stores close as well, it's too late to encourage shoppers back with cheap rates for start-ups or free rent."