Backdating of Business Rates and SBRR

[DavidMd]

I'm currently looking at buying a former farm site, which has some barns and yard area currently used for storage, with sitting tenants. Unfortunately none of the sitting tenants have registered for non-domestic rates, and most have been on site for 5-10 years or more.

If I took it on I'd be looking to get the site above board for business rates, but I'm concerned this could lead to a hefty backdated rates bill for the sitting tenants, some of whom I know personally and would rather not land with a large bill.

It would appear there is no limit on how far the local authority can go back for unpaid business rates, but in this instance the buildings are small and low quality enough that the tenants would easily have qualified for 100% SBRR throughout their occupancy. My first question is, can SBRR be backdated if the occupier wasn't registered for rates? There appears to be some info online about backdating SBRR, with some local authorities going back to 2012, some going back up to 6 years. Our own local autority website says SBRR can only be backdated to the start of the current rating list, which would appear to be only Apr 2023, which seems rather short compared to other info online. However I'm unsure if any of this backdating could be applied where the occupier hadn't actually registered for business rates in the first place, as it seems intended for occupiers who have been paying rates and would have qualified for relief.

So the obvious worst case scenario is that the council decides to backdate rates by X years, but then says the tenants don't qualify for any SBRR, or can only backdate the SBRR to Apr 2023 etc.

My hope is that we could get all the tenants registered for rates and apply for the reliefs they would qualify for, which would result in no rates for them moving forwards, and the council may not look into it too closely to apply any back rates. But having no experience with this I'm unsure how likely this is. I'm also unsure what evidence the council would need (if any) in order to apply backdated rates.

Does anyone have any experience dealing with similar situations that can share the outcome, or know of where I can go for advice on the issue?

I've tried enquiring with the VOA on a generic basis, but their response was that they no longer give general advice, and an application to the VOA would need to be put in before they can assess anything.

 

[IanSuth]

i can't help re rates but having grown up on a farm and seen changes around us - at least in West Sussex the council were VERY quick to jump on any change of use away from agricultural.

You need to ensure that all building on the land when you arrive are recorded as being there as a neighbouring farm was sold and a shed (well vehicle workshop) then had to be demolished as the new owner couldnt prove it was there when it was a farm.

Farmers have a LOT of exemptions from things that you won't as a non agricultural owner, so go in with your eyes wide open

 

[DontAsk]

I would make it a condition of purchase that the current owner (or his conveyancer) sort it out before the sale goes through.

 

[WaveJumper]

As above defiantly get this sorted as condition of sale as you are about to open a real can of worms and. Yes the VOA office will be All over this.

 

[DavidMd]

Thanks for the replies. Planning isn't a concern as permission was granted in the 90's for change of use to B1 which is now Class E, and there's plenty of evidence for the 10 year rule to apply for B8 use. Quite strange that it never ended up on the rating list considering this.

I think it's good advice to get the rates sorted before any purchase goes through rather than after, but I'm still hoping to find a way the tenants can do this without landing themselves with large rates bills. If it's left to the farmer to sort I have no idea how he'll handle it, and with a couple of the tenants being friends I'd prefer to get them some advice on the best way to handle it rather than wash my hands of it and let the current owner sort it.

I'm hoping someone who has dealt with getting a properties added to the ratings list can shed some light on how the process generally goes (i.e. did the VOA visit the property to assess, how much did they look into the history of the property and the occupiers etc), or even better dealt with backdated rates or backdating SBRR, just to get an idea of how local authorities have dealt with similar situations, but I appreciate that's probably a long shot.

 

[WaveJumper]

Yes they would visit, I have had experience where they have turned up to a property (shopping centre) unannounced and seen walking around by security taking photos. On this visit they decided that all the “mobile” merchandising units you find strung out up the middle of all large shopping centres should be rated, in fact this even included any advertising units / wall panels making an income should also be charged.

As you can imagine a lot of discussion took place but in the end we lost and all the units were measured and a fee levied we were lucky as they never backdated this as they at first threatened. This is why I mentioned above, once the VOA are contacted a can of worms could well be opened. And in my experience you won’t know what stance they will take until they are approached. Get the seller to do the asking and sorting or engage a professional rates advisor before going any further.

 

[bodgitt&scarperLTD]

Are there even any tenancy agreements in place? Sounds like there may not be anything official?

If not then just issue everyone with a tenancy agreement from when you takeover and apply for rates valuations/exemptions.