Poundworld denied £4.1m business rates lifeline ahead of collapse
The Government’s revaluation of business rates was supposed to hand the retailer a tax cut.
Poundworld was denied a £4.1 million lifeline before it went into administration after it was unable to secure a cut in business rates, it has emerged.
The budget retailer recently fell into administration, putting more than 5,000 jobs at risk.
Staff were informed on Wednesday that Hilco had been hired to start stock clearances as administrators at Deloitte struggled to find a buyer.
Analysis by business rates specialists at Altus Group has found that the retailer, which has 335 stores, was unable to claim the money it was owed amid the Government revaluation of the property tax in 2017.
This was because the Government set aside £3.4 billion to hand to businesses facing the most dramatic rate hikes, and this transitional relief was paid for by denying rate cuts to other firms.
Where local economies are struggling and values fall, ratepayers need to benefit from the full reduction immediately Robert Hayton, Altus Group
Robert Hayton, head of business rates at Altus Group, said: “Transitional relief should apply only to those bills which increase between one revaluation period.
“Where local economies are struggling and values fall, ratepayers need to benefit from the full reduction immediately.”
Many retailers have blamed business rates bills for an increase in financial distress on the UK high street.
Retailers have also been contending with cost rises from the weak pound, and from increases in the national living wage.
This, combined with a squeeze on consumer spending and a switch to online shopping, has piled pressure on to high street chains.
Retailers including Toys R Us, Maplin and Warren Evans have fallen into administration this year, while many other household names have undertaken store closure programmes to save on costs.