High street shop to close due to business rates

A picture framing shop in Totnes is closing its doors after four years, claiming it is because of "unfair" business rates.

Owner Steve Fussell said Studio 4 Street had been trading well but the combined taxes he was paying took up a third of his turnover.

The business rates on his shop are high, he said, because he is paying the retail rate for the whole of his ground floor, even though only 10% of the space is used for retail.

The Valuation Office Agency, which sets the rateable value on which business rates are based, said that if a ratepayer believes their valuation is wrong, they can use the online service to check the details.

Mr Fussell said he had considered trying to reduce his bill by putting up a wall between the retail area and the workshop.

But it would cost him thousands of pounds and no-one would confirm whether the structural change to the shop would have any effect on what is judged to be retail space, he said.

"When you look at our turnover and all the different taxes, so the PAYE (Pay As You Earn), the NIC (National Insurance Contribution) the VAT (Value Added Tax), the Corporation Tax and the business rates - that's nearly £50,000 a year gone," said Mr Fussell.

"Well that's an awful lot of turnover to make a profit to pay that kind of bill."

Tim Jones, chairman of the South West Business Council, said he believed the current system needed to change.

"Business rates are currently at a 26-year high, probably double the tax you would pay in France or Germany," said Mr Jones.

"And it's one of those regressive taxes which you pay, whether or not you're doing any turnover.

"All of those issues make this one of the most unpopular taxes we've got and it's having a really negative effect on our high streets," he added.

The Valuation Office Agency (VOA) is responsible for setting the rateable value of non-domestic properties in England and Wales for the purposes of business rates, but it is not the same as the business rates bill.

Councils use the rateable value to calculate business rates and then use a multiplier and apply any rates relief.

A VOA spokesperson said: "Most of our valuations are based on rental values, as well as comparing similar properties nearby to make sure we take a fair and consistent approach.

"For small shops, we take an extra step to reflect differences in shape and use between properties. We split shops into zones from front to back, with each decreasing in value. Customers are more likely to stay near the front of the shop, so this area has the highest value.

"If a ratepayer believes their valuation is wrong or wants to check the details we hold about their property, they can use our online service."

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