back to article BT and Virgin Media claim 'broadband' tax will cost £1.3bn

Rivals BT and Virgin Media have joined hands to collective moan that a forthcoming hike to business rates will result in tripling of their collective tax bill to £1.3bn over the next five years. The Valuation Office Agency‘s revaluation of business rates will come into force on 1 April 2017. But Virgin and BT complained the …

  1. Anonymous Coward
    Anonymous Coward

    They can moan all they want

    There will simply be no money in the budget unless there will be a tax hike.

    1. Anonymous Coward
      Anonymous Coward

      Re: They can moan all they want

      There will simply be no money in the budgetBrexit bribe chest for the government to fund all that post-Brexit investment they are promising unless there will be a tax hike.

      There fixed it for you.

      1. tmTM

        Re: all that post-Brexit investment

        Can't wait for the £350m a week to hit the NHS, we've all been sitting around planning what we're going to be spending it on!

    2. Alan Brown Silver badge

      Re: They can moan all they want

      Oh dear mr council.

      I'm very sorry, but owing to extra charges, we're having to increase the service provision costs for your premises by XYZ amount - which coincidentally is the same as you've just billed us.

      We don't care.

      We don't have to.

      We're the phone company.

  2. J.G.Harston Silver badge

    So, you have a tax based on the value of property, and the property value goes up, shock horror, the tax goes up. Who'd'a thunk it?

    1. Martin Summers Silver badge

      Go on, say you'd be happy about it if it was your council tax...

      1. Anonymous Coward
        Anonymous Coward

        >Go on, say you'd be happy about it if it was your council tax...

        It is everyone's Council Tax - and we will still endure cuts/austerity and the continuing collapse of social care despite it. Not happy but I know a further rise in local and national taxation is still required, though it probably won't happen as we're apparently 'having our cake and eating it'.

        1. Tom 7

          >Go on, say you'd be happy about it if it was your council tax..

          Having just paid £400 for a wheel replacement due to the lack of council repair teams fixing potholes I think I can safely say the less than £10 saved on council tax due to outsourcing would have been very well spent.

        2. Alan Brown Silver badge

          "and we will still endure cuts/austerity and the continuing collapse of social care despite it."

          In some councils *ahem*Surrey*ahem* the amount of _documented_ fraud by contractors and staff is far higher than the proposed cuts, but manglement are busy trying to sweep that under the carpet instead of callling in the SFO.

      2. Anonymous Coward
        Anonymous Coward

        Go on, say you'd be happy about it if it was your council tax...

        I would - if I could be sure that the local council would use the money sensibly and put it towards social care rather than (another) refurbishment of the new offices..

    2. Jellied Eel Silver badge

      That assumes the value of the property has gone up. When I started working at an ISP, a 2Mbps leased line went for £2,000/month. Now.. it doesn't. The value of lit fibre's linked to the value of the services that run across it, and the market price for services has fallen, not increased. Potential capacity has gone up, but that doesn't mean customers are going to be happy paying higher business rates or service charges for dark, lit or even 'dim' fibre. Especially as the market's pushed towards FTTC/FTTH provision.

      1. Oddlegs

        The value of the property has nothing to do with what's in it. If I fill my house with gold bullion I don't have to pay more council tax than if it was filled with cabbages.

        If the value of the property hasn't gone up then the tax won't go up

    3. Trigonoceps occipitalis

      Any tax based on a property value needs some form of "agreed value" as its base. This to avoid fluctuations in tax take and constant arguments about the instant value. When there is an election due it is politically expedient and all too easy to postpone the revaluation. When the process if finally undertaken the result is a vast hike. Those affected forget that they may have had several years underpaying. As property value can go down as well as up, a minority will have been underpaying.

      For what it's worth one of the drivers for the change from domestic rates (a property tax) to the community charge (a personal tax - poll tax to some) was the pain of the great increases expected in ratable value. Ratable value was calculated according to some arcane formula base on the rent that may be obtained at some time in the past. Rates were neither fair nor transparent.

      1. Trigonoceps occipitalis

        As property value can go down as well as up, a minority will have been overpaying.

        FTFM

  3. wyatt

    Sounds straight forward but it's going to affect a lot of businesses, small and large. Fortunately my wife's premise hasn't had a large rise as this would bankrupt her.

  4. Haku

    Big businesses complaining about paying tax?

    Awww diddums.

  5. EddieD

    Why are they whinging?

    They'll just push out another RPi x 3 rise to their customers and let them pay.

    1. John Brown (no body) Silver badge

      Re: Why are they whinging?

      Beat me to it. Tax is a business cost taken into account when planning the products retail price.

      Although I don't really see it affecting the price of a Raspberry Pi all that much.

      1. druck Silver badge
        Stop

        Re: Why are they whinging?

        BT has already screwed over both their customers and everyone using wholesale broadband infrastructure with big prices increases to pay for the takeover of EE, and football for their failing TV channels.

  6. Rol

    BT and Virgin Media claim 'broadband' tax will cost £1.3bn

    Several million users and me claim 'broadband' tax will cost them £2.6bn

  7. PTW
    Facepalm

    Any chance of some detail being added to the text?

    Without me having to Google it, exactly how are the BR changes adversely affecting BT/Virgin?

    Were exchanges previously exempt/reduced rate?

    Come on el Reg, some facts please, rather than "big business moans"

    1. Halfmad

      Re: Any chance of some detail being added to the text?

      This requires journalism and not a lazy FOI fired off, you're chances are slim if it's not on the first google answers page.

    2. Anonymous Coward
      Anonymous Coward

      Re: Any chance of some detail being added to the text?

      A little known factoid is that BT and Virgin have to pay business rates on the cables in the ground, the boxes at the end of the street and every Telegraph pole.

      The value of that estate has gone up ralidly simply because of the value of Broadband in all its guises to the economy

      The Mobile operators have to pay rates on their masts etc.

      I only found out because it was discussed at a Council Meeting last October

      So much for this revaluation being tax neutral.

      1. Jellied Eel Silver badge

        You want the gory details?

        See-

        http://manuals.voa.gov.uk/corporate/publications/Manuals/RatingManual/RatingManualVolume5/sect871/rat-man-vol5-s871.html

        Which includes fun elements like testing freshly laid fibre can attract a rate charge, and so can fibre that's switched off. Which can lead to issues around how to cease connections properly to avoid future charges. BT, Virgin, Kingston get a different metric based on number of subscribers, as well as rateable value assessed to infrastructure. But basically if you have dark fibre, rates are due on it from the entity that lights it, not the supplier. What it means in practice is explained in the Practice Note here-

        http://manuals.voa.gov.uk/corporate/publications/Manuals/RatingManual/RatingManualVolume5/sect871/rat-man-vol5-s871-pn-Fibre-2017.html

  8. Steve Todd

    Translating that

    It's going to cost them an extra 173 million per year (spread between the two of them) on top of the already fairly generous tax breaks they already get.

    Not a huge amount of sympathy, and the amount they've already bumped line rental by should cover it.

    1. Commswonk

      Re: Translating that

      It's going to cost them an extra 173 million per year (spread between the two of them) on top of the already fairly generous tax breaks they already get.

      Don't lose sight of the fact that Business Rates (like Corporation Tax, utility bills and so on) are not really paid by the businesses themselves. The tax bill may be posted to them, but their only source of money is their customers who have to pay an increased amount for whatever the business is selling / doing. Similarly it is ultimately the customers who derive the benefit of any tax break; well maybe...

      Not a huge amount of sympathy, and the amount they've already bumped line rental by should cover it.

      Flying Pig Icon needed again...

  9. Anonymous Coward
    Anonymous Coward

    I'm confused if BT and Virgin and countless other companies are going to have to pay the councils higher business rates then why is everyone's council tax bills going up by the maximum with the councils still moaning about not having enough money? 1.3bn isn't small change.

    1. Commswonk

      Because with a few exceptions Business Rates are paid to the Treasury, not the local council.

      Simples.

    2. John McCallum

      Business Rates do not go directly to the Local Government they go to Whitehall and are then doled out

      in penny packets to the various bodies The treasury keeps most of it.

      1. Roland6 Silver badge

        Business Rates are paid to the local council. Since 2013 the councils have been able to retain up to 50% of the business rates collected, with the remainder going to government for redistribution as grants. It is the government's intent for "local government as a whole" to retain 100% of business rates by 2020.

        http://www.local.gov.uk/business-rates

  10. Crazy Operations Guy

    Someone clearly doesn't understand the tax code

    "it’s a backwards step to hike business rates"

    Back in the 1950s it was quite common to have business tax rates in the 80-90% in western nations. However, your tax bill could be lowered by spending money in improving infrastructure (Which was the intent of higher taxes). In many cases (Not sure about the current UK tax code) you'd get a deduction of 1.1 Euros for every Euro spent on business expansion costs, and in many countries the ratio is higher. Beside, most tax codes also allow you to deduct the "retail" value of any improvements make, so they wouldn't even have to spend that much.

    Its not like there isn't anything productive they could spend money on. They could spend a Billion Pounds on replacing all the corroding copper with fiber; replacing the broken antennas on cell phone towers; fixing their routers; investing in undersea links; anything really... And all that spent money will end up coming right back to them in the form of higher rates due to much higher speeds, more loyalty from customers, etc.

  11. Dan 55 Silver badge
    Devil

    Doesn't this £1.3bn tax neatly cover broadband subsidies?

    More than £1bn for faster UK broadband in autumn statement

    Yes, yes it does.

  12. adam payne

    "The Valuation Office Agency‘s revaluation of business rates will come into force on 1 April 2017. But Virgin and BT complained the new regime will mean a higher tax rate for their property plant and equipment assets, which could adversely affect their broadband investment plans."

    Of course they'll raise the price of broadband for customers of offset this.

    1. StudeJeff

      Of course they will. Anyone with even a basic knowledge of economics knows that companies don't really pay taxes. Taxes are just a part of the cost of doing business and in the end all such costs are paid for by the customer, and if costs get too out of line with what the company can charge it gets out of that business.

  13. Charles Smith

    Robbing Peter to pay Paul

    Paying more business rates increases the expenses, but reduces the amount of Corporation tax paid.

    1. Roland6 Silver badge

      Re: Robbing Peter to pay Paul

      But Business Rates is a largely unavoidable tax, ie. a cost of doing business. Corporation Tax on the other hand is a voluntary tax, which as we have seen is easily avoided if you are a multinational.

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