Rates rise 'will bankrupt tens of thousands of businesses'

Tens of thousands of small firms could go out of business following tax increases, the Conservative Party has warned.

The warning followed the ending of relief on business rates in April of this year, which the Tories claimed would add £100m to the amount small businesses would have to pay – £40m more this year, £30m more in 2010-11 and £30m more in 2011-12.

The tax rises stem from the relief given to businesses on business rates designed to ease companies in to higher valuations on commercial properties through which the tax is calculated.

Valuations were made in 2005 and are usually revalued every five years, meaning they are due to be reassessed next year.

However, the relief granted to assist businesses in the face of falling property prices expired in April and was not renewed.

The Tories claimed, as a result, small businesses will have to pay an extra £1,000 in tax each year for the next three years.

Reports in the national press claimed today that figures released by the government acknowledged the detrimental impact the tax will have on small businesses, saying that government figures estimated one in 20 small companies will go bust as a result of this extra burden.

However, a Labour Communities and Local Government spokeswoman said the claim was "nonsense" and "a complete misreading of figures which are about non-collection rates".

She added: ''To suggest this is some sort of cover up is absolutely nonsense - business rates is not a new tax. We recognise the pressures businesses have been facing which is why we've already taken steps to help them put off and spread part of this year's bill to future years.

''In fact next year's rates bill will on average fall for the majority of organisations - including small businesses and shops, and a £2b scheme will help keep future rises down for other businesses.''

The dire predictions came as the BAPC launched a Ratings Scheme to help printers reclaim monies owed through the relief scheme.

For a fee of £395, a valuation of the property will be carried out and rate rebate will be claimed on behalf of the company. An additional "modest percentage" will then be charged. All claims must be made before the next valuation in 2010.

BAPC chairman Sidney Bobb said: "This scheme will help our members recover potentially thousands of pounds that they will never see again. We hope as many printers and possible will take full advantage."