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District council faces making £1.1m refund after business rates challenge by Amazon

Cannock Chase District Council is set to lose around £1.1m in a business rates refund after the Valuation Office Agency (VOA) upheld an appeal by online retailer Amazon.

Amazon’s rateable value on its warehouse in Rugeley has been reduced by the VOA by 18% to £2.76m from £3.37m, which means the company will receive a £3.2m refund backdated to April 2011.

This sum will be shared between the council, central government, Staffordshire County Council and the county fire authority, with Cannock Chase’s share expected to be around £1.1m though figures are yet to be finalised.

The council said this was a substantial proportion of its £13.5m budget for 2020-21.

Amazon’s warehouse was built in 2009 and is the largest business rates payer in the district.

It had a rateable value then of £3.18m and Amazon initially paid Cannock Chase £1.25m a year, which by 2016-17 rose through valuations for alterations to the building to £1.7m a year.

The council said it had been notified that a reduction on the current annual rates bill of £300,000 to £1.4m was expected to apply.

Council leader Gordon Alcott said: “Amazon is a highly valued employer in the district but this reduction in business rates is another major blow to this council, following on from the closure of Rugeley Power Station in 2016 which led to a loss in business rates of £1m a year.”

Cllr Alcott said the decision not only hit council services but would be unfair to physical traders in town centres with which Amazon competes.

“I feel particularly sorry for our town centres and retail traders where there doesn’t appear to be a level playing field between the business overheads paid by these so-called bricks and mortar businesses against those paid by online traders,” he said.

“Although the government is offering business rate relief to some retail providers, it is only a sticking plaster and does not solve the fundamental problem.”

He said the present system meant Amazon’s building was treated as a basic warehouse, so it paid far less in rates than would a retail warehouse that dealt directly with customers or a high street shop.

Cannock Chase would write to the Government to urge it to address this issue “before we see the further demise of yet more town centres”, Cllr Alcott said.

An Amazon spokesperson said: “Business rates are part of Amazon’s broader £18bn investment in the UK since 2010, which includes creating 2,000 jobs last year, taking our total workforce to 29,500.

“This investment helped contribute to a total tax contribution of £793m during 2018 - £220m in direct taxes and £573m in indirect taxes.”

Mark Smulian

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