A businessman has been hit by changes to the tax rules which mean his office is now classified as two premises – and it could see 30,000 small firms ordered to pay £15,000 a year more.
The changes are also backdated to 2015, which could hit some firms hard.
The so-called staircase tax means that if a business operates from spaces on different floors of the same building, or on offices off different corridors, those spaces can be classified as separate premises with business rates charged on each one.
Plymouth businessman Peter Cuddehay, who owns a printing business and art gallery on the city’s waterfront, said the rules are unfair.
“It’s an iniquitous tax,” the 67-year-old business owner told plymouthherald . “Where is the fairness? I think it’s wrong.”
The Supreme Court ruling which allows the Valuation Office Agency, which recalculated business rates in 2017, to levy rates individually on offices on separate floors or corridors.
Previously they were treated as a single premises.
Some firms face rate hikes of up to £15,000 as a result of the new rules – which are backdated to 2015.
Mr Cuddehay said he has been forced to rip up his accounts for the past two years and start again.
His business operates over three floors, the top one only being a store, which has now been defined by HM Revenue & Customs (HMRC) as “two premises”.
Mr Cuddehay, who employs five people, previously qualified for business rates relief because the rental value of his property was less than £12,000.
But he now has to pay a back-dated bill of more than £5,000 – and will face tax bills in future when before he didn’t have to pay anything for being below the limit.
He faces prosecution if he doesn’t pay up, so he’s handed over the cash, but appealed and is awaiting a date for his hearing.
“It’s a joke. We must have been one of the first companies to have been hit by this,” he said. “A retrospective action is outrageous, I can’t believe they can get away with it.”
And it’s a double charge for Mr Cuddehay, a member of the Federation of Small Businesses as he now expects his Waterfront Business Improvement District levy charge, calculated on rateable value, to rise too.
“All our plans for investment have gone out of the window,” he said. “We’ll also have to go back to out landlord and maybe say we don’t need the top floor storage.”
Mr Cuddehay has now written to Sutton and Devonport MP Luke Pollard about his predicament.
Philip Hammond, the chancellor, is now under pressure from backbench MPs to address the changes and perhaps overrule them when he announces his Budget in autumn 2017.