As a business, we have been campaigning for a fairer balance in the taxation of the retail sector for many years. Every valuation cycle, Spring Budget, Autumn Statement and Queen’s Speech has been seen as an opportunity to move the dial and unilaterally reform business rates.
Any proposed online sales tax (OST) should not become a revenue-grabbing exercise. It should instead fund further retail business reliefs for physical stores that are not high-value. This would protect Britain’s high streets in a longer-term way than the emergency relief funds during Covid could allow.
The retail sector has undergone structural change, with Covid accelerating the move to online shopping. While many physical independent and convenience stores have done reasonably well, the flight to online shopping has been well documented. An OST may well level the playing field and reflect this change effectively.
We expect there will be a long period of review before any formal policy is proposed.
It is not straightforward to define what represents an online versus physical sales pipeline for multichannel retail.
It is a positive sign that the government is consulting on a possible OST for retailers, which should in turn allow further relief for Britain’s physical retail and high streets. However, it is also rather strange that the consultation has only started in 2022, after a global pandemic and Brexit.
Realistically, we cannot expect something to be put in place before 1 April 2023, even if the participants can find a way to cut through the many challenges such a tax presents.
Like most, we await the feedback on the consultation and admire the retail sector’s ongoing commitment to innovation and finding a way forward. I, alongside the industry’s many business rates experts, remain poised to provide guidance.
Ryan Jones is a partner in business rates at consultancy firm Cluttons