Update: Autumn Budget 2018

Business rates need to be replaced by a tax on profits, a local corporation tax. Business rates can drive businesses into failure, which means empty premises and the possibility of redundant staff needing benefits.

Similarly with council tax. Instead have a local income tax assessed annually like income tax by HMRC. That would be very easy. A proportion of each person’s income tax bill would be assessed as the amount paid to local authorities wherever that person has a home. Of course if someone has lots of homes his tax may exceed his income. But no one can live in more than one house at the same time, so the solution of selling some of them would reduce his tax bill to a manageable amount.

All need to pay for the services they receive from their council. I do not see why it should be related to income. Businesses should factor in business rates as part of their financial operating model, just as they need to pay for water, energy, and other overheads. If the business model is not viable it is not for everyone else to subsidise them.

Perhaps business rates should be paid on a totally different basis. Maybe pay directly for the services they use – waste disposal say – and on their occupied square metres for fire, police, education, social services contributions. Irrespective of whether they are in a high street or in the countryside. There could be differentiation between types of business – farming with large land requirements, and separately for farm shops and enterprises.

The beauty of a premises-based tax is that the it is hard to fiddle, massage away or disguise through some other artifice.

Business rates are a basic tax – they don’t cover the provision of any specific services such as waste disposal but they contribute substantially to the revenues available for roads, policing, street lighting, street cleansing and fire & rescue services as well as education, social services, leisure and recreation services, and parks and open spaces which businesses might not think they benefit from but they certainly do.

The business rate is determined independently of local authorities by the Valuation Office Agency, a branch of HMRC, and is based on the property’s value according to its location, size, condition and potential rent level. Unlike council tax it enables a degree of redistribution so that high value areas [such as Westminster] subsidise areas with lower property values.

I don’t think we should tinker with the fundamental basis of the business rate and replace it with something else which would probably have various drawbacks, but I see no reason why its impact cannot be moderated from time to time for overall economic reasons.

The problem that is leading to calls for reform of the business rate is that there is no longer a level playing field in terms of input costs for businesses (a) that serve people directly in towns, cities and villages and therefore have to maintain commercial frontages and employ specialist or professional staff, and (b) that operate in basic premises in remote locations and can manage to attract enough employees even at lower than average wage levels because they are basically on-line sales platforms with a fulfilment function. The on-line businesses are sucking the profit out of the high street and not providing expensive showroom and after-sales service. If someone visits a website but doesn’t buy it costs the company nothing but the same experience in a real shop has a cost impact in terms of staff time and engagement, product handling and spoilage, shoplifting, high-standard premises maintenance, customer toilets and other facilities, and presentation. I feel that the best way to deal with the imbalance is through the tax system and by removing the opportunities to export profits and import cost centres solely in order to reduce tax liabilities.

Thank you for that comment.

Basically it seems to be that capital taxes are harder to avoid as opposed to income or profit taxes. It is analogous to the fact that capital punishment can’t be reversed by an appeal court years after the sentence is carried out.

Unfortunately enthusiasts of capital taxation do not address the point that capital taxes can drive the taxpayer into debt and ultimately bankruptcy. In the case of a company this can mean employees being redundant and going onto benefits, and in the case of an individual also going on to benefits, and possibly his family as well. However the owner of empty premises on high streets is still subject to the capital tax penalty. But there is nothing to stop them being auctioned with a low reserve and then bought by someone who demolishes and leaves the site vacant for speculative purposes. Empty industrial premises are often rendered nontaxable by smashing in their roofs, in an act similar to bricking up windows to avoid “window tax” years ago. High street premises so treated would be more costly to reinstate.

Empty premises on high streets that are vandalised and burned down are often not replaced.

There is another point that capital taxes are governments behaving like individuals who spend their capital down – eventually it goes and does not generate income. A government dependent on capital taxes also faces reduced income tax, which means that the rate of either or both has to go up, until the entire nation is bankrupt.

I wonder how many tax avoiders use the virtual office at:
152-160 City Road London EC1V 2NX

There are 159,902 registrations on Companies House at this postcode and most of them seem to be at the above address.

Future Renovations UK possibly taking over the contracts from SafeGlaze UK who have recently gone out of business give this virtual office address on Trustpilot.

Companies should not be able to hide behind virtual addresses. Any reputable business should have a valid operating address and it is time all businesses used the address they operate their business from.

They know who we are and where we live, and we should know the same.

Traditionally a lot of companies had a registered address at the office of their company secretary which was often a solicitors’ practice. They are commonly known as Brass Plate Companies because the only sign of their existence is a brass plate [or some other permanent notice] to indicate their presence.

I am intrigued at the possibility that there are nearly 160,000 brass plates in such a compact location. That’s a big order for Brasso [other metal polishes are available].

There is a Wikipedia article on Brass Plate Companies which gives more information.

I have located the premises in City Road on Google Street View but it is not possible to see who the occupiers are. Some commercial services provider no doubt.

I agree there now should be much better control over the locations of companies as well as the creation of parallel companies with the same directors.

I won’t deal with firms that hide behind mobile phone nos. and roller shutters and don’t have a verifiable physical address and landline phone no. on their literature, stationery, premises and vehicles.

WRT landline phone numbers on literature: Most of these that do exist are to call centres whose telephonists know little about the goods and services being offered. In addition, some of these call centres collect money for the company by charging people via their telephone bill to wait in queues.
Many government agencies use call centres as well, the most infamous being HMRC, Benefits Agency, and the NHS. Government needs to set a better example.

Interesting read John.
Brass plate structures are associated with tax havens, corporate tax havens and offshore financial centres.

It just gets me that:
those at the bottom exploit benefits on offer
those at the top exploit loopholes to get richer
those in the middle who have worked hard for their properties and savings get exploited to prop up the rest.

The internet has bred a new form of Brass plate companies in the guise of virtual offices. It is time they were all exploited to prop up the rest of us.

I also don’t deal with firms in hiding, but many people will be caught out by them and their dodgy dealings.

Your words should be set in stone Reg and the stone set up outside Westminster , they are “Stateman like ” but alas small minds and fixed dogma rules us now.

Maybe so Deja vu but what about -quote-

We found a load of UK household plastics in illegal dumps in Malaysia

We traveled more than 6,000 miles to find everyday British products exported as recycling discarded at multiple illegal dump sites in Malaysia. Unearthed found brands familiar to UK supermarket shelves strewn across a vast pile of rubbish standing 10 feet tall on a site measuring nearly three acres. Packaging for Fairy dishwasher tablets, Yeo Valley yoghurt and Tesco Finest crisps was scattered across the pile, alongside plastics from Spain, France, Germany, Ireland, Japan and Australia. News today suggests things could be about to change, as the ——– reports.