Business
Rates
There have been some recent significant changes to be aware of relating to Business Rates.
Change in Completion Notice Practice
Do you have refurbished vacant office floors which previously have been deleted from the Rating List?
The Non-Domestic Rating Act 2023 amended Section 46A of the 1988 Local Government Finance Act. The alteration impacts Local Councils’ ability to issue Completion Notices.
Before this change Local Councils in certain situations were unable to issue a Completion Notice to bring a property back into the rating list. For example, in an office building undergoing refurbishment once the Rateable Value for a floor had been deleted due to the works the Local Council then struggled following completion of the works to issue a Completion Notice as these only applied to a ‘new building’. Unless any structural works had occurred, these floors did not meet the threshold of being considered ‘new’. Local Councils were therefore in limbo with floors that had been deleted as a result of a scheme of refurbishment as they did not qualify as ‘new’. This meant that deleted floors stayed out of the list for (sometimes) years before they were then re-let and brought back in to the list as an occupied floor.
Following this change Councils are now actively seeking to serve Completion Notices in such situations.
Empty Rates Mitigation – Change in the ‘re-set period’
Have you been using an Empty Rates Mitigation scheme?
In applying an empty rates liability, Local Councils have a binary ‘vacant’ or ‘occupied’ lens from which to view properties and apply the mandatory 3 (or 6) months’ empty rates relief to a rating assessment when it is deemed to move from being ‘occupied’ to ‘vacant’.
Over the years, several (now well known) schemes have operated in this space – pop-up shops, box-mitigation schemes, Bluetooth occupiers etc. This model has meant that for a rate payer once they have paid 6-weeks’ occupied rates they can then benefit from 3 (or 6) months’ empty rates relief (minus a savings related fee to the occupier). However, this has now changed as since 1st April 2024, an occupier now needs to be in occupation for 3 months to then benefit from 3 (or 6) months relief.
What the impact of this is remains to be seen. We suspect that there will likely be a further increase in landlords stripping out buildings to delete them from the rating list, and that there will be an increase in the adoption of ‘charity’ occupations.
General Anti-Avoidance Rule
One to watch going forward as to what constitutes tax avoidance.
In March the Government published some initial conclusions following the consultation into Business Rates avoidance and evasion. The reset period as mentioned above has been amended and the Government has also announced a further consultation on the merits of introducing a “General Anti-Avoidance Rule” for business rates. There are no further details as to what this means at this stage – however, worries abound as there is no definition of ‘avoidance’ and therefore, what qualifies is unknown.
Labour Party
On 10th April the Labour party released its ‘5-point plan to breathe life into Britain’s high streets’. One of the 5 measures is to 'replace business rates with a new system of property taxation which rebalances the burden and levels the playing field between our high streets and online giants.’ No further details on this potential change have been announced yet.