Jessica Fino 11 Oct 2017 02:39pm

Hammond suggests staircase tax could be axed

The chancellor Philip Hammond has suggested that the controversial staircase tax could be axed, admitting it adds business uncertainty

He said during a Treasury Committee hearing today that he is “certainly looking at” legislative steps to end the staircase tax.

“The court has made a decision and the Revenue is obliged to comply with the rating law. It is open to Parliament to consider changing the law in a way that changes that outcome,” he told the committee.

The Valuation Office Agency (VOA) has also defended its role in the introduction of the tax.

Around 5,500 businesses have seen their business rates increase thanks to the ruling, but the VOA said it had “no choice” but to change its approach on how to tax businesses that occupy more than one floor following the Woolway v Mazars Supreme Court case in 2015.

Mazars successfully applied to the Valuation Tribunal and Upper Tribunal to have the two office floors it occupied treated as one hereditament. Woolway then successfully appealed to the Supreme Court to have these decisions overturned.

The ruling meant that, where a business occupies more than one part of a multi-occupied building and they have to use shared areas, such as a staircase or corridor to assess the different floors, these need to be separately assessed for business rates purposes.

These increases are backdated to April 2015 in England and April 2010 in Wales.

Melissa Tatton, the VOA’s chief executive, said in a letter to Nicky Morgan, chair of the Treasury Committee, that of the 11,000 that had to be reviewed, 5,500 businesses saw an increase in their rateable value since the changes, with 4,100 of them seeing an increase of less than 10% and 1,4000 greater than 10%.

Tatton also revealed that 3,5000 saw a reduction in their rateable value and 2,000 saw no change.

The Federation of Small Businesses (FSB) has welcomed the chancellor’s comments. Mike Cherry, national chairman, said, “The staircase tax has heaped misery on thousands of small businesses that happen to occupy split workspaces.

“The chancellor’s words will come as welcome relief to the desperate firms who had absolutely no idea that bill hikes were coming down the line.

“The chancellor’s decision marks a victory for common sense – he’s done the right thing. We look forward to his words becoming action at the Budget if not before.”

Several MPs have spoken against the staircase tax, including Morgan, Jacob Rees-Mogg, Treasury Select Committee member, Chi Onwurah, Labour shadow business minister, and Vince Cable, leader of the Liberal Democrats.