Further Clarification on the Meaning of Occupation in Relation to Empty Property Business Rates Reli

Three recent cases have provided helpful rulings in relation the meaning of Occupation referred to in The Rating (Empty Properties) Act 2007. These provisions which came into force on 1 April 2008 have been a major cause for concern to investors since introduction.

As the law stands, an empty commercial property will attract full business rates after 3 months; industrial units and warehousing will attract full business rates after 6 months. Charities are now subject to 100% relief as are Community Amateur Sports Clubs, Listed Buildings and buildings of companies in liquidation, receivership, or administration. For full business rates not to apply, property must be occupied for more than 6 weeks within the billing period. Whilst the legislation will also allow changes to the structure of the building to make it unmarketable, and thus avoid full business rates, this is often impractical.

Three recent cases help in interpreting the meaning of occupation in this legislation:

In Kenya Aid Programme v Sheffield City Council [2013] EWHC 54, premises were held to be occupied wholly or mainly for charitable purposes even though the charity only occupied 25 to 30% of the surface area. The occupation did not have to be efficient or economically viable. Business rates were therefore avoided.

In Public Safety Charitable Trust v Milton Keynes Council [2013] EWHC 12 37, the court reiterated the need for the use to be wholly or mainly charitable; and having wi-fi points for use by the charity was insufficient. The Charity Commissioners have also warned charities as to their responsibilities in relation to business rates relief.

Sunderland City Council v Stirling Investment Properties LLP [2013] EWHC 1413 - Here a 43 day lease for the tenant’s occupation for his bluetooth equipment was satisfactory as a lease of more than six weeks in duration. As the premises were warehousing this allowed six months of empty business rates liability to be avoided.

Business Rates Relief Generally

Note: It was announced in December 2012 that between 1 October 2013 and 30 September 2016 newly built business premises would not pay any rates whilst empty for the first 18 months.

Small business rates relief in England and Wales has now been extended to 31 March 2014. In Wales post offices have specific relief, i.e. if the rateable value is less than £9000 no rates are paid. Between £9000 and £12000 there will only be 50% liability.

As of 1 October 2010, for 30 months only, small business premises will not pay business rates if the rateable value is less than £6,000 and not the previous £2,600. Small business rates relief will be tapered between £6,000 and £12,000. To claim, the applicant must not have more than one qualifying property in the billing area.

The Localism Act 2011 has a provision whereby local authorities will have a wider discretion to waive business rates liability if in the interests of the community.

Should you have any further questions in relation to Empty Rates Relief, Business Rates generally, or on any other subject, please do not hesitate to get in contact at professional.support@djblaw.co.uk

#LegalNews