In a letter to Minister for Local Government Rishi Sunak MP UKHospitality highlighted the flaws in the relief rates system, which was introduced last year, and raised concerns that the relief distributed by local authorities may be in breach of EU state aid rules.
The body is concerned that in some cases, hospitality businesses receiving reliefs are penalised, and so the entire system should be reviewed at the earliest opportunity.
It also criticises the chancellor for failing to take action on the issue in his Spring Statement.
“The introduction of discretionary relief for businesses was well-intentioned, but it has caused hospitality businesses a number of significant headaches,” says UKHospitality chief executive Kate Nicholls.
“Local authorities were, in many cases, slow to begin distributing the relief and we saw numerous examples of councils attaching completely arbitrary stipulations to the reliefs. These stipulations ran counter to the spirit of the fund and unfairly penalised businesses that were entitled to relief.”
At present, the rules prevent EU countries from giving financial assistance to some companies but not to others in a way that could impact fair competition.
“We are also concerned that the application of the relief may unintentionally breach state aid rules designed to avoid a distortion in competition in the EU. We have informed the Government that we believe discretionary rates relief should not fall into this category and that hardworking hospitality businesses should not be penalised in any way for accessing relief to which they were entitled,” says Nicholls.
“We have called on DCLG to act to ensure that hospitality businesses that contribute so much to their local communities are not punished and reiterated our call for a full review of the business rates system that is long overdue.”