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Review of Business Rates Might Benefit the Rural Broadband Rollout

Monday, Mar 16th, 2015 (9:41 am) - Score 695

As expected the central UK Government has today announced the start of a new review into Business Rates and thus the related taxation set by the Valuation Office Agency (VOA). It’s just possible that this could also result in an adjustment that benefits the roll-out of rural broadband services, but don’t hold your breath.

Last year the Business, Innovation and Skills Committee called for a “wholesale review” of the notoriously complex business rates system and the Government eventually agreed. The new review will look at “how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property“.

Danny Alexander, Chief Secretary to the Treasury, said:

Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.”

On the surface this doesn’t sound very broadband orientated and indeed it’s too early to be sure what, if any, impact it might have. Never the less last year’s BIS Committee did hint that such a review could go beyond the administration of business rates and examine whether retail taxes need to be “based on sales rather than the rateable value of a property“.

Why is this important? At present some smaller alternative network ISPs feel unfairly treated, particularly in regards to the differences between the charges that the VOA levy against them versus BT and Virgin Media for deploying new fibre optic cable (aka – “Fibre Tax“).

Put simply, BT pay tax on their profits (arrears), while smaller ISPs pay tax as soon as the fibre optic cable becomes active (lit) and the latter ignores whether or not the operator actually makes any money from it. The VOA has in the recent past also highlighted the potential for related tweaks to their existing rate card (here)

But for now the new review is still trying to define the broadness of its scope and there are other factors working against a major shift in the so-called Fibre Tax. Firstly the outcome is due to be published before next year’s Budget 2016 and by then a new Government with different ideas may have come to power.

On top of that we all know how long it takes to turn policy into action and by the time any changes have been implemented then the current deployment would already be reaching the most remote rural areas, while most of the major work and decisions will have already been taken (i.e. too little, too late?).

Finally, the Government has already implemented a £1 billion package to reduce the cost of business rates in 2015-16, albeit with particular support for the smallest businesses and the high street. But the review itself envisages an outcome that would be fiscally neutral, which suggests that the actual tax collected will hold to the same level as today.

It’s worth pointing out that Business Rates are handled differently in Scotland and Northern Ireland, with today’s review being focused more on England, although it may help to inform other parts of the UK. In any case we wouldn’t hold out much expectation for any dramatic changes to the broadband related landscape, but you never know.

But one change that might help is adjusting the rates so that you don’t need a degree in economics and accounting just to make sense of them.

Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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