The Treasury Committee has launched an inquiry into the UK’s business rates system, in order to assess the impact of business rates on firms.
The Committee intends to examine how changes in government policy have altered the business rates system. It will also analyse ‘how the current business rates system is operating’.
Additionally, the inquiry will assess the ‘economic justification’ for a property-based business tax, taking into account the impact of business rates on rental prices and property prices. The Treasury Committee also stated that it will consider alternatives to property-based business taxes, such as the proposed Digital Services Tax.
The Federation of Small Businesses (FSB) welcomed the inquiry. Mike Cherry, its National Chairman, said: ‘The FSB has worked with the government to secure a set of reforms to business rates since 2016 – doubling small business rate relief, linking annual rises to CPI, transitional relief, and now a high streets discount.
‘The tax, however, remains regressive, and not linked to ability to pay.
‘We welcome the inquiry as the next step in building on the recent work to help, and sort out a modern tax system that balances the need to fund public services with protecting our vibrant 5.6 million-strong small business community.’
The Treasury Committee has launched a new inquiry into whether UK banks are doing enough to help vulnerable customers.
As part of the inquiry, the Committee will examine whether vulnerable individuals are being overcharged for insurance. A report published recently by Citizens Advice suggested that some individuals are losing as much as £877 a year for being a loyal bank customer.
The inquiry will also scrutinise whether certain groups of consumers are being excluded from receiving a basic level of service from their bank.
The Treasury Committee will look to address these issues by considering the definition of vulnerability; any practices currently in place; which customers suffer the most when bank branches close down, and how to cater for their needs; the impact of ATM closures; and how post offices can help in areas where bank branches have closed.
Commenting on the matter, Nicky Morgan, Chair of the Treasury Committee, said: ‘With customers expected to take more responsibility for their financial planning and resilience, bank branches closing, and the number of free-to-use ATMs falling, it’s becoming increasingly difficult for vulnerable customers to access certain financial services.’
In a new report, the Treasury Committee has called for the government to reform tax relief on pensions.
The Committee reviewed the current state of UK household finances, and suggested that many households are presently ‘over-indebted’, and are without a ‘rainy day savings buffer’
According to the Treasury Committee, tax relief is ‘not an effective or well-targeted way of incentivising saving into pensions’. It has urged the government to give ‘serious consideration’ to replacing the lifetime allowance with a lower annual allowance, alongside introducing a flat rate of relief, and promoting tax relief as a bonus or additional contribution.
Within the report, the Committee also stated that a number of changes are ‘presenting new challenges to households saving for retirement’, including the ongoing transition from defined benefit to defined contribution pensions.
Commenting on the report, Nicky Morgan, Chair of the Treasury Committee, said: ‘Many households are facing challenges that are putting pressure on the health and sustainability of their finances. Over-indebtedness, lack of rainy day savings and insufficient pension savings are some of the weaknesses in the household balance sheet identified in this inquiry.
‘The Committee’s report makes a series of recommendations for the government to consider that would help households ensure that their finances are as resilient as possible.’
The Treasury Committee has expressed concerns in regard to the impact of the UK’s current business rates system on firms.
In a letter to Chancellor Philip Hammond, Nicky Morgan, the Chair of the Committee, stated that business rates place a ‘financial burden’ on UK businesses, and questioned whether the system is ‘fit for purpose’.
‘It’s clear that many bricks and mortar stores are struggling to remain competitive against online retailers, with the Chancellor admitting that business rates can represent a high fixed cost for some businesses,’ said Mrs Morgan.
‘We are likely to scrutinise business rates further as part of our Autumn Budget inquiry later this year.’
In response to the Treasury Committee’s letter, the Chancellor ruled out reforming the business rates system, but did admit that the tax has ‘hit the high street too hard’.
Mr Hammond also stated that the government ‘needs to find a better way of taxing the digital economy’, and that it has been ‘making progress’ in regard to this.
Lin Homer, chief executive of HM Revenue and Customs (HMRC), has apologised to the Commons Treasury Committee for the tax department’s poor performance in handling telephone enquiries.
She also revealed that extra staff were being employed to take calls in the evening and that additional online services were being introduced, in an attempt to improve HMRC’s customer service.
Only half of calls to HMRC were answered in the period between April and June 2015 – a figure which was described as ‘staggeringly bad’ by the cross-party committee of MPs. This is the second time that HMRC has been severely criticised by MPs inside a week, after the Public Accounts Committee accused HMRC of ‘failing UK taxpayers’.
In response, Ms Homer explained that a series of changes introduced after this period had led to an improvement between July and September, when 76% of telephone queries were successfully dealt with by either a recorded message or a member of staff.
However, Conservative MP Mark Garnier said that 24% of calls still going unanswered was ‘completely unacceptable’ and argued that a similar level of customer service would lead to a commercial enterprise going out of business.
HMRC has said that it has introduced a new telephone system which means that up to 20,000 staff could be deployed to answer the phone at any one time.