Despite the former Chancellor, Philip Hammond, claiming that he would cut business rates by a third for all high street firms in England with a rate-able value below £51,000 from 1 April this year, it has emerged that the collapsed tour operator Thomas Cook was only entitled to the tax relief on less than 2.5% of its retail shops because of strict European Union rules.
According to the real estate adviser Altus Group, Thomas Cook had 446 shops in England that were liable for business rates with a rate-able value less than £51,000 and were eligible, in principle, to the former Chancellor’s £900m 2-year tax stimulus.
But EU rules restrict State aid to €200,000 per business over a three year period meaning large retailers and hospitality firms are only entitled to claim tax relief upto around £88,900 for each year of the retail discount enough to fund the relief on just 11 Thomas Cook shops.
Robert Hayton, who is Head of U.K. business rates at Altus Group said, “Thomas Cook, like most large retail and hospitality chains, would have reached the de minimis regulation limit pretty quickly one way or another and were precluded.”
Hayton added, “Around a third of all small properties are completely exempt from business rates whilst 90% of independent retailers are entitled to the cut but nothing has been done to help the major employers ease the burden despite the structural changes taking place.”
Dave Lewis the boss of Tesco, Britain’s largest retailer, is currently gathering support within the retail sector for the Government to permanently cut business rates by 20% for all shops irrespective of rate-able value to be paid for by a 2% levy on online retail sales.