Online giants pay less as small shops and pubs suffer: MPs and business groups warn controversial shake-up of rates will finish many of them off

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Big internet firms will pay lower rates at most of their warehouses, because they are based in parts of the North and Wales where property is cheaper than in the South

The controversial shake-up of business rates will boost online giants such as Amazon while destroying Britain’s high streets, business leaders said last night.

MPs, business groups and analysts have warned that many pubs, restaurants and shops face a rise in rates from April that could finish them off.

But Amazon, Asos, Boohoo and other internet stores will benefit from generous tax cuts as a result of the first overhaul of business rates for seven years.

Big internet firms will pay lower rates at most of their warehouses, because they are based in parts of the North and Wales where property is cheaper than in the South.

Meanwhile, taxes will rise for more than half a million smaller companies – some by up to 300 per cent – prompting fears that many independent high street shops, restaurants and pubs will go bust.

Business rates are based on the ‘rateable value’ of a property. These are being revalued based on changes to property prices. This means small firms and shops in affluent urban areas are more likely to suffer while those with their premises in cheaper, low-growth regions may have the tax cut.

Last night it emerged that Mike Ashley, the billionaire owner of Sports Direct, would save nearly £900,000 over five years on his Shirebrook warehouse in Derbyshire.

MPs have accused him of running it like a ‘Victorian workhouse’ and paying staff less than the minimum wage, although Mr Ashley has since agreed to an independent review of the company’s practices.

According to analysis from business rent and rates specialist CVS, JD Sports will get a similar tax cut at its warehouse in Rochdale, which has also been criticised for subjecting staff to poor working conditions.

The sportswear retailer was forced to launch an internal investigation after reports of workers complaining that its Rochdale site was ‘worse than prison’.

Last night Frank Field, Labour chairman of the Commons work and pensions committee, said: ‘It looks as though these business rate reforms are going to reward a suite of employers who have been shown to be sweating their workforce.

‘Meanwhile, many smaller businesses on the high street who are attempting to remain decent citizens now have a whacking great hike in rates to deal with.’

Ian Cass, of the Forum of Private Business, warned that increases in business rates could lead to the ‘death of diversity’, adding: ‘One of the lovely things about Britain’s high streets is this mix of bookshops, independent retailers and grocers.

‘My fear is this diversity will disappear, we’ll lose these lovely shops and be left with town centres full of charity shops.’

Campaigners have singled out the tax cut for Amazon as the most glaring injustice.

High street retailers have struggled to compete with the internet giant as more people shop online.

Amazon has also been accused of gaining an unfair advantage over high street shops by avoiding tax. Its reputation was damaged when it emerged that it paid £11.9million in tax in 2015, while its Luxembourg arm took £5.3billion of sales from British internet shoppers.

The firm has also been accused of creating ‘intolerable working conditions’ at its warehouse near Dunfermline, although it insists it provides a ‘safe and positive workplace’.

But the shake-up of business rates means it stands to gain an even better deal from the exchequer. Business rates will fall at six of its nine distribution centres.

Amazon, Asos, Boohoo and other internet stores will benefit from generous tax cuts as a result of the first overhaul of business rates for seven years

In Swansea, the rateable value of its warehouse has been cut from £2.2million to £1.9million. Its Doncaster facility has had its estimated value reduced by £100,000. The overall bill for Amazon’s nine UK warehouses is set to fall by more than £140,000, although the company said that rates for its London head office would rise.

Online fashion retailer Boohoo will also see rates at its warehouse centre in Burnley fall 13 per cent, according to CVS, while Asos will see no change on the rateable value of its warehouse in Barnsley in South Yorkshire.

In stark contrast, the rateable value for shops in England and Wales will rise by 8.51 per cent, with 507 villages, towns and cities seeing even bigger rises.

Among the worst affected will be 79 shops in the seaside town of Southwold on the Suffolk coast, which face a 152.48 per cent increase in rateable value. Mark Rigby, chief executive of CVS, described this as a ‘hammerblow to small shops’, while business groups including the CBI, the Institute of Directors and the British Chambers of Commerce have all warned that the rate increases will lead to a significant number of firms going bust.

The Institute of Directors yesterday urged the Chancellor to come to the aid of smaller businesses and introduce further tax relief for those based in properties worth less than £100,000.

But the Treasury said the retail sector as a whole would see a 6 per cent fall in its business rates bill – a saving of £400million – following the revaluation, with a third never having to pay rates again.

£900,000 DISCOUNT TO PUT A SMILE ON MIKE ASHLEY'S FACE 

Hauled before MPs: Sports Direct tycoon Mike Ashley with his ex-wife Linda

By James Salmon, Banking Correspondent for the Daily Mail 

The billionaire founder of Sports Direct is one of the big business figures who will benefit from the business rates shake-up, it emerged last night.

Mike Ashley is in line for a £900,000 tax cut on the retailer’s controversial Shirebrook warehouse in Derbyshire, it has been claimed.

The giant facility, where up to 5,000 workers clock in every day, is the hub of Sports Direct’s multi-million pound online operation.

But MPs have accused Mr Ashley, who is worth an estimated £2.4billion, of running the facility like a ‘gulag’ and a ‘Victorian warehouse’.

Sports Direct is also being investigated by HMRC for paying staff less than the minimum wage due to being forced to wait to be frisked by security guards at the end of the day.

But according to analysis from business rent and rates specialists CVS, the firm will benefit from a 2.3 per cent reduction in the rateable value of the 800,000 square foot warehouse. This will result in a saving of nearly £900,000 over the next five years.

One of its main rivals JD Sports will see a 15.7 per cent reduction in the rateable value of its Rochdale facility – although this will result in a similar cut to its tax bill.

Like Shirebrook, the Rochdale facility has also been criticised for treating staff poorly. The retailer was forced to launch an internal investigation after reports of workers complaining that the site was ‘worse than prison.’

Labour MP Iain Wright, who has headed a Commons’ inquiry into pay and conditions for low-paid workers, claimed staff were ‘treated like scum’.

Last night Frank Field, the Labour chairman of the Commons work and pensions committee, said: ‘It looks as though these business rate reforms are going to reward a suite of employers who have been shown to be sweating their workforce.

‘Meanwhile many smaller business on the high street who are attempting to remain decent citizens now have a whacking great hike in rates to deal with.’

A spokesman at Sports Direct said it was ‘preposterous’ to single out the firm, as its big presence on the high street means its overall tax bill is likely to go up after the business rate changes.