Business rates are a tax on occupation payable by almost every occupier of non-domestic property. They are usually the third highest cost for many businesses, behind staff and rent, but are often not given the attention they merit.
Competing issues and complicated calculations
When acquiring new premises, there are so many competing issues to be addressed to minimise business disruption, that it is very easy to overlook the business rates liability until the rates bills arrive from the local authority.
To make matters worse, calculation of rates liability has become increasingly complex over the years. What should be a simple matter of multiplying the assessment (Rateable Value – RV) by the rate in the pound (multiplier) is often complicated by additional factors:
- Transitional relief
- Large property supplement
- Crossrail supplement
- City of London surcharge
- BID (Business Improvement Districts) levies
- Small business relief
- Rural Rate relief
- Empty property rate relief
- Listed building exemption
- Retail relief
- Charitable relief
- Enterprise zone relief
Identify business rates errors early and avoid problems
There are very few rates liabilities that won’t be affected by at least one of these factors so it is no surprise that not all business rates bills issued will be right first time.
Correcting errors can often be difficult and time consuming so here are our top six tips to identify and avoid problems before they occur:
- Identify the assessment that applies to the property: This may be straightforward, but not always. The address used by the Valuation Office, which sets assessments, may not match that used by the building owner or Royal Mail.
- Check whether the assessment includes all the accommodation being acquired: Car spaces and basement stores will usually be assessed separately to offices on upper floors so you may have more than one liability. The acquisition may, of course, cover part only of an assessment so action will be required to split.
- Speak to the local authority to confirm business rates liability: Do not rely on figures provided by the landlord.
- Check whether empty property relief is available: There is often a discrepancy between the lease start date and the date of physical occupation. You may be entitled to up to 3 months rate free while the property remains vacant, 6 months in the case of industrial property. The relief runs with the property and the landlord or previous occupier may have already claimed part or all of any relief.
- Ensure you inform the local authority of the date your interest commences: Provide confirmation of the lease start date and date of physical occupation, if different. Do not leave it to the landlord.
- Check whether the assessment has been appealed: You need to know whether or not your rates liability is be based on an agreed assessment. There may be appeals outstanding on behalf of the landlord or previous tenant. You may need to register your interest in these appeals in order to protect your position.
Can we help?
If you are looking for new premises and have any questions regarding your likely business rates liability please contact us and we will do our best to help you.
Quarter Days are the four days of the calendar year when commercial leasehold payments and rent - including office rent - are due.Read More