A pub operator has slammed his ‘unfair’ business rates - highlighting that they cost him the price of 150 pints of bitter every week.
Lee Forshaw, director of the Withy Arms Group Limited, described the system as unjust. And to show his disapproval he has put a beer on the bar called ‘£331’.
He says the figure shown on the pump clip is just over what the pub pays in business rates each week.
Mr Forshaw said: “The rates payable at the Withy Arms at Leyland have, we feel, always been disproportionate and even now the new rateable values have been released, we are still paying just over £331 every week.
“That’s equivalent to the total income from the sales of over 150 pints of WA bitter every week straight to the local council. This is the amount we have to pay every week before we even open our doors on Monday morning. That can’t be right, can it?”
“We are aware of other restaurants and pubs in Leyland who are being crippled by these ridiculously high business rates.
“The system is very unfair and the council has to ask itself why so many empty shops are around and why a lot of pubs do not have any long term landlords.
“To highlight this issue and the plight of many other small business in Leyland, and elsewhere, we have commissioned a beer called £331. It’s a 3.31 per cent abv strength and will be on the bar from today.”
Leader of South Ribble Borough Council, councillor Peter Mullineaux, said: “All business rates are set by central government and then collected by local authorities on their behalf.
“Following a 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.
“A Government scheme has been announced to help assist pubs by offering a reduction in their business rates for the current year.
“As a council, we are currently awaiting the full details about that scheme, but we are eager to support local businesses and are happy to help Mr Forshaw if he would like any further advice.”
Massive changes to business rates were brought in earlier this year and the full effects are now being felt by firms across Lancashire.
For many the overhaul has meant a reduction in rates but for others huge rises have left their businesses vulnerable to closure.
Derek Bolton, who has run Bluebell Liveries in rural Lancashire for the past quarter of a century, is one of the many businesses across the county to be hit hard by the shake up.
The overhaul of commercial tax charges, which were introduced in April, has seen his rates skyrocket 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. It 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.”
Recognising the role local pubs play in communities, a £1,000 discount has been made available during 2017 for pubs with a rateable value of less than £100,000 – 90 per cent of all pubs.
But many publicans say it is too little too late.
One director of a pub group in Leyland has even created a beer to draw attention what he sees as “disproportionate” business rates.
Lee Forshaw, director of the Withy Arms Group Limited has commissioned a beer called £331 - the amount he has to pay in business rates every week.
He said: “The rates payable at the Withy Arms at Leyland have, we feel, always been disproportionate and even now the new rateable values have been released, we are still paying just over £331 every week. That’s equivalent to the total income from the sales of over 150 pints of WA bitter every week straight to the local council.
“This is the amount we have to pay every week before we even open our doors on Monday morning.
“That can’t be right, can it?”
Last month, long serving landlord Ivan Lynas, 56, who runs the Imperial in Chorley, cited spiralling business rates as one of the main reasons he is leaving the trade.
Ivan, who was well-known as licensee at the former Harry’s Bar in Chorley, said: “The landscape has changed.
“I applied to the council for hardship rel ief. After eight weeks they responded and said I didn’t qualify.
“It was just to help me out. If I’d got that, I’d still be trading.”
Business rates are a tax paid by a business owner on any commercial property they own or rent. In some cases this is even on properties which are empty.
In the same way that residents pay council tax, businesses have to pay business rates.
Businessmen and women receive their rates bill from their local council.
l How are business rates decided?
Business rates are linked to the property market - so rates are tied to rents. This means that if property prices go up in one area, so will business rates and similarly if property prices drop, business rates will follow suit.
The size of a property also affects a firm’s business rates.
So for example a cafe on a high street which has a big floor space might have to pay more in rates than an app developer who is making money but does not occupy an office space.
Rateable value is set by the Valuation Office Agency (VOA) which is part of the Inland Revenue.
Rateable value is decided by Inland Revenue’s estimate of the property’s rental value which is decided during a revaluation.
l Why have business rates changed now?
The 2017 rating revaluation, or overhaul of rates, came into effect as of April 1. It is the first revaluation since April 1, 2010 and is based at the rateable value of properties as of April 1, 2015.
A revaluation is meant to take place every five years so the increase in business rates should have happened two years ago.
However, it was delayed by the Government to avoid businesses being hit by a sharp increase ahead of the 2015 General Election. This is why the hikes in rates now are more dramatic than otherwise.
The purpose of the revaluation is to re-aline rateable values with rental decline or growth since 2008.
l How does the calculation work?
Business rates are calculated by multiplying the rateable value of your non-domestic property by the correct multiplier (also known as the UBR or rate in the pound) set by the Government.
The rateable value is based on the rental value of the property.
The multiplier is increased each year by the September RPI rate of inflation to ensure that the Government consistently collects the same amount of money each year in real terms.