At this rate, the ‘charities’ are the real winners - Kevin Buckle

I know I mention business rates a lot but they are the one most important issue that will hinder economic recovery and were a major problem long before the pandemic.

By Kevin Buckle
Saturday, 11th June 2022, 7:00 am

Just to be clear I checked on non-domestic rates and the search revealed “non-domestic rates (also called business rates) are a tax on non-domestic properties to help pay for local council services”.

The obvious question businesses ask are what do they receive from their local council in return for the huge amounts all but the smallest businesses are asked to pay. What many businesses actually feel is that what they get in return is harassment and a procession of ideas and projects that adversely affect them.

While I don’t have the answer to how all the money could be raised if businesses were charged a more realistic amount there are a couple of things that should be looked at. Business rates are of course a UK problem and believe it or not there are no less than 30 businesses on Oxford Street in London that are being investigated for rates evasion.

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All but the smallest businesses pay huge amounts in business rates

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Let’s make sure the writing’s not on the wall for retail just yet - Kevin Buckle

It will surprise nobody that many of these businesses are souvenir shops and American candy shops. It is calculated the amount potentially lost just for Oxford Street is £5m.

All these businesses are set up so they can quickly fold when the council and the police get too close so the only way to stop this happening is for landlords to be more careful despite often being desperate to get a tenant.

Clearly this is less of an issue in Edinburgh and it should be noted there many souvenir shops trading legitimately but you only have to look at Princes Street to see that there is a problem.

Far more controversial is the fact that charities regularly don’t pay rates and rates are reduced when charities are involved. There is an automatic 80 per cent reduction for charities and the remaining 20 per cent is often granted by the local authority.

The other way to avoid rates is to take advantage of the fact that organisations not established or conducted for profit can also be awarded discretionary relief.

The trick here is to pay wages but not attempt to make a profit. This means the organisers can pay themselves a large wage but then claim they are not trying to make a profit.

I remember a similar argument over grants for theatres and music venues. Theatres could receive huge grants despite paying their top people large salaries while music venues just doing their best to not lose money most of the time were in theory a business trying to make money and therefore were not eligible for grants at all.

While mostly these “charitable” organisations are simply using the rules in place to reduce their overheads I regularly hear that the amount of charitable involvement is often exaggerated.

From what I can tell the council never check and you will see all these organisations often operating pop-ups and markets making a big deal about any charity involvement while essentially just running a business.

With so many councillors having a background with grant-based charities it is no surprise that they see nothing but good in “charitable” organisations and have little time for tax-paying businesses.

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