Forecourt Trader - 30 years at the heart of the fuel retailing community

Jac advises on cash flow and rates - and talks up a lovely location

01 March, 2012
Page 16 

Cash flow probs anyone?

I think I could've headed this piece 'We're doomed!' or 'Daily headaches?' or 'No worries? Not likely!' Running any business comes with problems/worries on a daily basis. But I was prompted to raise this subject again when contacted by a retailer I had featured recently who wanted to remain anonymous (so as not to be tainted by having too many problems). "Are many people ringing you about cash-flow problems?" he asked. "An order of 30,000 litres is costing in excess of 40,000. That's a lot of money. And some suppliers are insisting on minimum orders."

The answer is, yes, some are ringing with cash-flow problems, with causes ranging from banks to suppliers to new competitors or aggressive tactics from old competitors. There's no fairy dust and despite the fact that we're all, to some degree or another, in it together, there is a big degree of dog eating dog.

I think there's just so much to worry about these days that it might be helpful to write lists which could start with the pros (your bright sides) and end with the cons (your worst-case scenario).

The 'professional' take on the list is, of course, the business plan. You should have one and you should regularly update it. I think if you do, you will find it helps to put everything in perspective and will point you in the right direction.

Highly rated

Chris Brown, director of Autohouse Group in Chelmsford, Essex, wrote to say that he had read my article on rates in the January issue (where I discussed Doug Wardle's rising rates, falling turnover and the possibility of an appeal) and had a few observations.

Get ready for a bit of a masterclass. "Firstly, the valuation office (VO) is part of HMRC rather than the council, so be wary! The VO sets the rateable value; the council merely does what it is told and collects the rates due.

"The Rateable Value of the property is its (hypothetical) rental value as at April 1, 2008, known as 'AVD' (antecedent valuation date), and, in the case of petrol forecourts, is calculated from the previous 12 months' trading figures.

"Thus, if those months were distorted for some reason not known to the VO (as Doug's were), the assessment will also be distorted. There are other factors which can increase or decrease the rateable value, depending on the pattern of throughput and trading, and the facilities offered, which may not have been known to the VO. The calculation can be complicated, and the VO often does not ask all the questions necessary to achieve the correct answer. The other point, which you picked up on, is that if the trade and throughput is disturbed for some reason, such as extensive roadworks or the opening of a new supermarket forecourt nearby, this is known as an 'MCC' (material change of circumstances) and can justify a reduced assessment from the date of the change."

As a member of the Royal Institute of Chartered Surveyors (always a good place to go for some free advice), Chris' company also offers free advice to clients and potential clients.

"If the enquirer provides us with trading data, we can advise free-of-charge if the assessment is too high (or even too low!) and offer to do something about it. Yes, an appeal can go to Tribunal but in the case of a petrol forecourt, where the assessment is based on the agreed formula, it may be pointless going down that route unless the reason was an MCC."

He says there are no costs involved in an appeal unless you've appointed a professional to advise you, when you'll have to pay his costs, which are not recoverable, even if the case is won. Chris normally advises clients of the risks and wouldn't recommend an appeal unless you're pretty sure of a good enough outcome to cover costs.

And the result can always go in the wrong direction. He adds that HMRC recently published new regulations which seem to tend to favour the VO, and it is easier for the appellant to slip up and have his appeal disqualified through not meeting a deadline.

If you'd like to consult the company, the telephone number is 01245 496880.

Looking for a picturesque location?

Does anybody have a bit of money they'd like to invest in a super location? John Hunt has had Kintyre Filling Station in the picturesque fishing village of Tarbert near Loch Fyne, Argyll, on the market for a while.

And he's been having a conversation with Euro Garages which may be interested in adding it to their growing chain which so far hasn't stretched to Scotland.

John's main problem has been cash flow and a not-very-helpful bank and he had to close the site last summer.

It is freehold and on the main road, overlooking the harbour and marina and is the last petrol station before boarding the ferries for the islands of Islay and Arran. And it's only 38 miles away from the Mull of Kintyre.

"The place needs a garage," says John. "The locals have a 30-mile round trip for fuel."

In 2010, its last full year of trading, the business did a litreage of 603,000 plus LPG and it has a small shop attached.

In addition, it's exempt from rates as it qualifies for rural petrol station relief. It's sad that something in such a lush location should wither away. Someone should save it. Have a Google or give John a call on 01880 820272 if you're interested.





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Weekly retail fuel prices: 15 January 2018
RegionDieselLPGSuper ULUL
East124.9460.90131.85122.27
East Midlands124.34132.31121.54
London125.0662.90132.42122.10
North East123.94133.63121.07
North West124.1658.50132.51121.18
Northern Ireland123.4169.90128.40120.85
Scotland124.5774.90130.88121.33
South East125.1561.40132.52122.48
South West124.73130.24121.91
Wales124.44128.57121.19
West Midlands123.7465.23132.27121.20
Yorkshire & Humber123.9161.90132.74121.12

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