Chancellor urged to plug support gaps caused by Business Rates anomalies

Helen Millne

A leading social enterprise is urging national and local government to work together and simplify rules to stop small firms falling through the cracks in the Chancellor’s COVID-19 financial support package.

Rishi Sunak has introduced wide-ranging measures to provide a safety net for businesses during the current social-distancing lockdown in response to the coronavirus pandemic.

While the majority of employers and self-employed are covered by the emergency packages now in place, thousands of legitimate small businesses are missing out on this vital support according to The Women’s Organisation.

The Liverpool-based social enterprise is drawing attention to the plight of small firms that are still missing out on financial support because of how they pay their Business Rates.

It is calling on national and local government to work together to address anomalies in the Chancellor’s aid package for entrepreneurs.

It points out that, by tying the eligibility of support grants to Business Rate relief schemes, some SMEs will be excluded from grant funding of up to £10,000.

The current guidance declares that “the Government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no Business Rates because of the Small Business Rate Relief (SBRR), Rural Rate Relief (RRR) and Tapered Relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.”

However, The Women’s Organisation says this determination means some SMEs will not receive support, unless the Government instructs local authorities of additional eligibility criteria.

It says this includes businesses that occupy separate designated office space and within their tenancy/licence agreement pay a contribution to shared business rates in managed workspace/incubators, where one rateable value is applied to the whole building.

This is often advised as the most appropriate method for Business Rates collection by the Business Rates Office when tenancy agreements are ‘easy in and out’ and would mean a lot of change in billing.

The Women’s Organisation suggests that, on receipt of appropriate evidence, the grant is paid to businesses with tenancies in properties with shared Business Rates.

However, to prevent fraud, the local authority could verify claims by asking managing agents/landlords to provide a declaration including lists of all legitimate tenants, including the company name, size of space occupied, and confirmation that they have been paying a contribution to the Business Rates prior to March 11, 2020.

Businesses can also provide their most recent tax return showing their address, and a copy of their license or tenancy agreement.

Another issue identified by The Women’s Organisation is that social enterprises can have many structures, including charitable status. It has been suggested that, as these SMEs receive mandatory relief for charities and not SBRR, they will not be eligible for the £10,000 grant.

A simple solution would be to confirm that social enterprises with the appropriate rateable value receiving mandatory relief for charities will be eligible for this grant.

Helen Millne, deputy chief executive of The Women’s Organisation and National Growth Programme Board member, said: “While the package of support announced by the Chancellor, alongside the response from local authorities, are certainly very helpful interventions which will go a long way in ensuring that small businesses and, consequently, our economy are protected at this critical time, there are still clear gaps which urgently need to be addressed.

“By tying the eligibility of these grants to the Business Rate relief schemes, there are unintended consequences which will result in legitimate small businesses that are contributing to the economy through the tax system not being supported through the scheme, as was originally envisaged by the Chancellor.

“As such, we have been working directly with a number of government departments to inform them of the feedback we have received from the local business community and have made a number of specific asks from them which are key to protecting small businesses, incomes and jobs.

“We hope to see these fundamental issues addressed as soon as possible.”

The Women’s Organisation also highlighted help from other sources, such as the Liverpool City Region’s “one front door” access point for business start-up and growth support, Enterprise Hub, which is providing a comprehensive support package to the region’s new and early phase businesses, which will evolve as the crisis unfolds.

The programme, which has already supported more than 1,700 businesses during the crisis, has made a rapid and effective transition to online support, now offering its services via phone or video conferencing, including a series of real time video training workshops for SMEs.

The Hub’s expert advice team are now supporting clients with critical issues, such as accessing finance and cashflow management, to HR issues and cyber security.

Close