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How high business rates are stifling companies

Date Added: 25/10/2013  

High business rates are one of the top areas of concern for companies that are trying to grow despite the testing economic climate in the UK.

Many businesses have found it very difficult to cope with the high cost of rates and as a result, the country's high streets have emptied due to the lack of firms able to meet these bills.

High profile business leaders are now calling for the government to take action on business rates and improve the situation for companies that are trying their best to survive and thrive.

Stephen Marks, the boss of French Connection, has claimed business rates in the UK are calculated to an "absurd" system that needs to be overhauled. Speaking to the Daily Telegraph newspaper, he explained it is causing retailers to go bust, affecting the high street.

"Rates can be 40 per cent of your turnover, it can be crazy the amount you have to pay," he said. Although Mr Marks has not called for business rates to be scrapped entirely, he wants the system to be overhauled to be made fairer and this is a view many company bosses will agree with after struggling to pay for their rates in the last few years.

Mr Marks also highlighted the demands being made by some business landlords as a problem facing companies all over the UK. He explained that for organisations with money in the bank it can be expensive to get out of a lease, as landlords have been known to ask for five years worth of rents to get out of a five-year contract.

But Mr Marks stated that French Connection is "honourable about paying rent" and would "not putting the shops into administration and then going back to the landlord with a new deal, which many of our competitors have done".

The clamour for the government to reform its business rates system is only set to get louder in the coming weeks and months, with the British Retail Consortium (BRC) among the bodies that has called for changes to be made.

Accountancy firm EY has been appointed to lead a review into business rates by the BRC.

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