Retailer slams system forcing him to close shop for good of his business
THE owner of Alex Salmond’s local convenience store has attacked Scotland’s “punishing” business rates system for making rural shops an “unviable” prospect for retailers.
Aberdeenshire retailer Sid Ali says he will have to close one of the five village shops he owns after the latest reassessment put his rates bill up by around £18,000.
Most of Sid’s stores are well below the £15,000 rateable value threshold, meaning, under the Small Business Bonus Scheme, they shouldn’t owe any rates.
However, as they are all part of the same business, their rates are calculated as though they are all part of the same store.
As a result, Sid’s business, which grew to five Nisa stores last year, is having to fork out an extra £18,000 in rates.
Sid said: “It’s so morally wrong. What I’ve done is take on a shop that’s potentially unprofitable and unviable for a single site owner. The only way we can make it viable is through scale – and I get punished for it.
“It’s stopping me looking at sites that are potentially viable, but no-one else wants to take on.
“Communities will lose out because the council are being greedy. At this time, when there are more and more vacant units, surely councils have a duty to encourage businesses to take up units, not discourage them.”
While he and his business partners could potentially avoid payment by setting up separate companies for each of his shops, Sid said this was a route he preferred not to go down.
“The government is forcing business owners to fiddle something that shouldn’t need to be fiddled. Surely rates should be calculated completely separately on each shop. It shouldn’t matter who owns it.
“A lot of people are just setting up separate entities, but that seems stupid. If you keep them separate you need to have separate accounts for each one, which means a bigger accounting bill, which can be just as big as the rates. We’re stuck between a rock and a hard place.”
Sid said he is now in the position of having to decide which of his shops to close, among them his most recent acquisition, Nisa Local Strichen, which is where former First Minister Alex Salmond buys his newspapers.
“I’m planning to have a word with him. Even if he brings it to the attention of the council that would be something,” said Sid.
“Councils should look at businesses like mine and say it’s fantastic that we’re stimulating growth and making all the shops better. Every time we open a store the value of the property around it shoots up.
They should be offering us rates exemption, but they don’t see the bigger picture.
“The Strichen shop already closed down once because it was unviable for the owner for exactly the same reason. We’re now in the position that it might end up closing down again, despite all of our investment, despite it being a good, profitable shop, because we can’t make it work.
“We spent a fair bit of money bringing it up to standard. It’s probably the best-looking shop we’ve built. And we’re being hammered for having it. The easiest thing I can see to do is close it or sell it off to somebody. How stupid is that?”
The Scottish Government amended its small firms relief scheme a few years ago to take into account multi-site owners with two or three small premises, so that they didn’t get lumbered with a huge hike simply for taking on another small commercial property, but Sid said the system remained highly illogical.
“I don’t mind paying rates. It’s the unfairness of it. If I own a business and I’m a multi-site retailer, treat me the same as if that shop was owned by a single store operator. Or give me the same concessions you give to the big multiples like Tesco. Don’t punish us for being a small, growing business.”
David Lonsdale, director of the Scottish Retail Consortium, said: “The current system of business rates is expensive and only seems to function through byzantine exemptions and reliefs that continue to grow as an overall proportion of the total amount paid in business rates.
“The increasing use of such sticking plasters highlights how the current system is becoming more inefficient and is no longer fit for purpose.
“There is an urgent need to recast business rates for the decade ahead, in order to deliver a reformed system which is modern, sustainable and competitive. We hope the Barclay Review – which is due to report this summer – will lead to a reformed rates system and substantially lower tax burden as it would increase retailers’ confidence about investing in new and refurbished shop premises, create jobs and help revive high streets and town centres.”
