Business Rate relief advice - our agent and our landlord having opposite views

[Rob C]

Hi everyone - I'd like to ask advice on our business rate relief application case, since we have been having our agent and our landlord with 2 completely opposite view on it.

We have been renting a property since 2021 and we have been paying the business rate since then, the lease is under 4 names and the total rent per year is £41K, although the official retable value by the VOA is £16K per year; therefore, last year, when the business rate went up in April, our landlord suggested that we could apply for the business rate relief since we run 4 completely different business, and that we could also backdate the application to at least April 2024, if not 2021.

In January we presented our case to an 'appeal my rate' company and they believed that our case is legit and we should be able to get 100% discount, they believe that since the property is divided across 2 floors, the best way to do it is to split the business by Unit ground floor and Unit first floor, and en fact 2 of us occupy the ground floor and the other 2 the first floor; there's also a communal area but each of the businesses have paramount control of their own areas.

Although our landlord originally suggested to apply for it, now he believes that by splitting the lease into Ground floor / First floor, so to have 2 subleases of £20.5K each, we run the risk of not only not being successful with the application, but to have the rateable value of the property re-assessed (as I mentioned the rateable value at the moment is £16K while we pay £41K per year) so that the business rate will go up and we would also have to pay back the higher business rate from the date that we would backdate our application.

My questions are :

- Would our case be successful in your opinion?

- And if not, are we also risking the case of VOA re-evaluating the property and so we would end up paying more in business rate rather than less? and if so, would they also backdate the higher business rate?

Any advice on that would be greatly appreciated, thanks in advance.

 

[Newchodge]

Hi everyone - I'd like to ask advice on our business rate relief application case, since we have been having our agent and our landlord with 2 completely opposite view on it.

We have been renting a property since 2021 and we have been paying the business rate since then, the lease is under 4 names and the total rent per year is £41K, although the official retable value by the VOA is £16K per year; therefore, last year, when the business rate went up in April, our landlord suggested that we could apply for the business rate relief since we run 4 completely different business, and that we could also backdate the application to at least April 2024, if not 2021.

In January we presented our case to an 'appeal my rate' company and they believed that our case is legit and we should be able to get 100% discount, they believe that since the property is divided across 2 floors, the best way to do it is to split the business by Unit ground floor and Unit first floor, and en fact 2 of us occupy the ground floor and the other 2 the first floor; there's also a communal area but each of the businesses have paramount control of their own areas.

Although our landlord originally suggested to apply for it, now he believes that by splitting the lease into Ground floor / First floor, so to have 2 subleases of £20.5K each, we run the risk of not only not being successful with the application, but to have the rateable value of the property re-assessed (as I mentioned the rateable value at the moment is £16K while we pay £41K per year) so that the business rate will go up and we would also have to pay back the higher business rate from the date that we would backdate our application.

My questions are :

- Would our case be successful in your opinion?

- And if not, are we also risking the case of VOA re-evaluating the property and so we would end up paying more in business rate rather than less? and if so, would they also backdate the higher business rate?

Any advice on that would be greatly appreciated, thanks in advance.

What does your 'agent' say about this?

 

[Rob C]

Hi Lisa, thanks for your reply.

Our agent says that in their long experience working in this specific field, they never came across a case where the valuation office re-evaluated the property and so the business went up after their review.
On the other hand, the landlord said that it just happened to him with some of his other properties.
I don't see why any of them would be interested in making things up about this..

 

[fisicx]

Increase the value and HMRC gets more tax.

 

[Rob C]

Increase the value and HMRC gets more tax.

Hi, are you saying that you think they will actually increase the business rate?

 

[fisicx]

Hi, are you saying that you think they will actually increase the business rate?

No idea but if they consider the current valuation to be too low (so the landlord pays less tax) it’s quite likely the new valuation will be enforced.

 

[Newchodge]

Hi Lisa, thanks for your reply.

Our agent says that in their long experience working in this specific field, they never came across a case where the valuation office re-evaluated the property and so the business went up after their review.
On the other hand, the landlord said that it just happened to him with some of his other properties.
I don't see why any of them would be interested in making things up about this..

But you aren't re-evaluating 'the' property. You are getting a new evaluation on 2 separate properties. Potential big difference.

 

[Rob C]

No idea but if they consider the current valuation to be too low (so the landlord pays less tax) it’s quite likely the new valuation will be enforced.

So you are aware that this happen.. would you know if do they also ask for backdated payments if the retable value and therefore (at least I'd assume) the business rate goes up?

 

[Rob C]

But you aren't re-evaluating 'the' property. You are getting a new evaluation on 2 separate properties. Potential big difference.

Correct, what impact (and difference) do you think that will have in your opinion?

 

[Newchodge]

Correct, what impact (and difference) do you think that will have in your opinion?

I have no idea. I expect it would mean a complete re-evaluation because of the very different properties involved.

You have given your details to an 'agent'. If they are of any use whatsoever, they can answer your questions. Have you already paid them, or entered into an agreement to pay them?

 

[fisicx]

So you are aware that this happen.. would you know if do they also ask for backdated payments if the retable value and therefore (at least I'd assume) the business rate goes up?

Talk to your solicitor. Ideally the one you used when taking out the lease. Not sure your rates will be backdated, it all depends on the VOA.

 

[WaveJumper]

Hi everyone - I'd like to ask advice on our business rate relief application case, since we have been having our agent and our landlord with 2 completely opposite view on it.

We have been renting a property since 2021 and we have been paying the business rate since then, the lease is under 4 names and the total rent per year is £41K, although the official retable value by the VOA is £16K per year; therefore, last year, when the business rate went up in April, our landlord suggested that we could apply for the business rate relief since we run 4 completely different business, and that we could also backdate the application to at least April 2024, if not 2021.

In January we presented our case to an 'appeal my rate' company and they believed that our case is legit and we should be able to get 100% discount, they believe that since the property is divided across 2 floors, the best way to do it is to split the business by Unit ground floor and Unit first floor, and en fact 2 of us occupy the ground floor and the other 2 the first floor; there's also a communal area but each of the businesses have paramount control of their own areas.

Not really sure why you went to an "appeal my rate company" in the first place. At the end of the day it will be obvious to the VOA that you are looking to negate your current business rates. I have done many a project where we have split larger areas into small units for commercial reasons the VOA would be looking at your plans (have you had any drawn up) they would be looking for separate access, facilities etc etc. that one would expect to see how 2 / 4 business were operating independently within a building.

In many cases building control would want to see plans. VOA would come along and re-access each unit and remeasure. I don't believe you state what size the current unit as this would have an effect on any "possible" savings, are you hoping each unit would be getting 100% relief

Although our landlord originally suggested to apply for it, now he believes that by splitting the lease into Ground floor / First floor, so to have 2 subleases of £20.5K each, we run the risk of not only not being successful with the application, but to have the rateable value of the property re-assessed (as I mentioned the rateable value at the moment is £16K while we pay £41K per year) so that the business rate will go up and we would also have to pay back the higher business rate from the date that we would backdate our application.

My questions are :

- Would our case be successful in your opinion?

- And if not, are we also risking the case of VOA re-evaluating the property and so we would end up paying more in business rate rather than less? and if so, would they also backdate the higher business rate?

Any advice on that would be greatly appreciated, thanks in advance.

In short speak to the VOA yourself, they don't bite, outline your plans you will soon find out if any "savings" are possible. And personally I wouldn't listen to the landlord

 

[JonWhite_Adler]

Hi everyone - I'd like to ask advice on our business rate relief application case, since we have been having our agent and our landlord with 2 completely opposite view on it.

We have been renting a property since 2021 and we have been paying the business rate since then, the lease is under 4 names and the total rent per year is £41K, although the official retable value by the VOA is £16K per year; therefore, last year, when the business rate went up in April, our landlord suggested that we could apply for the business rate relief since we run 4 completely different business, and that we could also backdate the application to at least April 2024, if not 2021.

In January we presented our case to an 'appeal my rate' company and they believed that our case is legit and we should be able to get 100% discount, they believe that since the property is divided across 2 floors, the best way to do it is to split the business by Unit ground floor and Unit first floor, and en fact 2 of us occupy the ground floor and the other 2 the first floor; there's also a communal area but each of the businesses have paramount control of their own areas.

Although our landlord originally suggested to apply for it, now he believes that by splitting the lease into Ground floor / First floor, so to have 2 subleases of £20.5K each, we run the risk of not only not being successful with the application, but to have the rateable value of the property re-assessed (as I mentioned the rateable value at the moment is £16K while we pay £41K per year) so that the business rate will go up and we would also have to pay back the higher business rate from the date that we would backdate our application.

My questions are :

- Would our case be successful in your opinion?

- And if not, are we also risking the case of VOA re-evaluating the property and so we would end up paying more in business rate rather than less? and if so, would they also backdate the higher business rate?

Any advice on that would be greatly appreciated, thanks in advance.

Hi Rob,

I would agree with WaveJumper in general on this one.

In order to gain full small business releif you will need to have a property with ratable value below £12k. gov uk/apply-for-business-rate-relief/small-business-rate-relief

Assuming each lease is seperate and not to the same business, each has differnet tenants, then you would expect that the current ratable value would be split between the new premises. You would expect the rateable value to increase per sqft for a smaller unit, so assuming a 20% increase across the two floors each would have a ratable value of £10k acheiving 100% releif.
You need to remember that the revaluaiton will be done on the new units but it will be on the same basis as a hypotheitcal lease as at 21st April 2021 when teh last revaluation was done - gov uk/introduction-to-business-rates/how-your-rates-are-calculated

You should gain a benefit in splitting the leases. The VOA will look at the situation on the ground and assess it on that basis, they are not where your issue may lay.

The local council ratings officer will be the one who assesses the proeprty for rates due and may appeal a rating or simply issue a combined bill. If the tenants are not linked this will not be an issue. WaveJumper's point about being seperate units comes in here. If you are sharing common facilities, kitchen etc (not toilets) then it may be considered a single proeprty for ratings purposes and your landlord would get the rates bill and then charge you.

Ratings is a very hard area and even the best get caught out with it. But listen to your advisor, I would recomend a ratings survayor rather than a reduce my rates company.

Jon.

 

[DontAsk]

I would recomend a ratings survayor rather than a reduce my rates company.

"Reduce my rates" companies are just spam merchants as far as I am concerned. Hardly a day goes by that I don't get spam telling me my business rates or water rates can be reduced. I don't pay either.

 

[Rob C]

I have no idea. I expect it would mean a complete re-evaluation because of the very different properties involved.

You have given your details to an 'agent'. If they are of any use whatsoever, they can answer your questions. Have you already paid them, or entered into an agreement to pay them?

Yes I paid them already and a would usually trust them, as I mentioned the main concern comes from the landlord who is totally convinced that the 'appeal my rate' company don't know what they are doing with our case.. he has multiple property and has been dealing with business rate relief application for several of his other property, so he should be also knowledgeable on this matter. This plus the fact that even here people are saying that this 'appeal my rate' company are sometimes a bit of scam makes me doubt about all of this.. they do have very good reviews on trust pilot though, so yeah, I am just very confused about who to trust

 

[Rob C]

Not really sure why you went to an "appeal my rate company" in the first place. At the end of the day it will be obvious to the VOA that you are looking to negate your current business rates. I have done many a project where we have split larger areas into small units for commercial reasons the VOA would be looking at your plans (have you had any drawn up) they would be looking for separate access, facilities etc etc. that one would expect to see how 2 / 4 business were operating independently within a building.

In many cases building control would want to see plans. VOA would come along and re-access each unit and remeasure. I don't believe you state what size the current unit as this would have an effect on any "possible" savings, are you hoping each unit would be getting 100% relief

In short speak to the VOA yourself, they don't bite, outline your plans you will soon find out if any "savings" are possible. And personally I wouldn't listen to the landlordI

I went to one of this company for peace of mind, I thought they could just make the all process smoother and faster.. we already paid them, so it is what it is now. I will call the VOA myself, thanks for the advice. We have drawn up plans and the 2 business have paramount control of their areas, although they share toilet and a common area. The business at the first floor occupies a smaller than the ground floor one but has better lighting and has been just refurbished so that total rent is spit equally anyways. I believe we have a genuine case, my main concern is if VOA would re-evaluate the premises since the big difference between the retable value of £16K and the actual pay rent of £41K, so that the business rate would go up rather than getting a relief. Did this ever happen in your experience?

 

[Rob C]

Hi Rob,

I would agree with WaveJumper in general on this one.

In order to gain full small business releif you will need to have a property with ratable value below £12k. gov uk/apply-for-business-rate-relief/small-business-rate-relief

Assuming each lease is seperate and not to the same business, each has differnet tenants, then you would expect that the current ratable value would be split between the new premises. You would expect the rateable value to increase per sqft for a smaller unit, so assuming a 20% increase across the two floors each would have a ratable value of £10k acheiving 100% releif.
You need to remember that the revaluaiton will be done on the new units but it will be on the same basis as a hypotheitcal lease as at 21st April 2021 when teh last revaluation was done - gov uk/introduction-to-business-rates/how-your-rates-are-calculated

You should gain a benefit in splitting the leases. The VOA will look at the situation on the ground and assess it on that basis, they are not where your issue may lay.

The local council ratings officer will be the one who assesses the proeprty for rates due and may appeal a rating or simply issue a combined bill. If the tenants are not linked this will not be an issue. WaveJumper's point about being seperate units comes in here. If you are sharing common facilities, kitchen etc (not toilets) then it may be considered a single proeprty for ratings purposes and your landlord would get the rates bill and then charge you.

Ratings is a very hard area and even the best get caught out with it. But listen to your advisor, I would recomend a ratings survayor rather than a reduce my rates company.

Jon.

Thanks for the advice Jon - would you mind if I ask you why do you think we could have a 20% rateable increase for a smaller unit? how does the re-evaluating method work? is it also based on the actual rent paid? if so, obviously we have no chance since the £41K total rent split by two could come to £20.5K for each business which is well above the £12k threshold.
I understand that is the local council ratings officer who would re-asses the property, but would they be called by the VOA to do that in case of an appeal?
Yes we are sharing a common area with some kitchen facilities and a table - is this gonna be a problem for our appeal application? I thought that businesses could share common areas as long they have paramount control of their own areas..
Anyways, it is correct, the landlord at the moment is getting the business rate and then charging us.

 

[JonWhite_Adler]

Thanks for the advice Jon - would you mind if I ask you why do you think we could have a 20% rateable increase for a smaller unit? how does the re-evaluating method work? is it also based on the actual rent paid? if so, obviously we have no chance since the £41K total rent split by two could come to £20.5K for each business which is well above the £12k threshold.
I understand that is the local council ratings officer who would re-asses the property, but would they be called by the VOA to do that in case of an appeal?
Yes we are sharing a common area with some kitchen facilities and a table - is this gonna be a problem for our appeal application? I thought that businesses could share common areas as long they have paramount control of their own areas..
Anyways, it is correct, the landlord at the moment is getting the business rate and then charging us.

Hi Rob,

The ratable value is not based on current rents. It is an assumed rent at 1st April 2021. You would not have an increase to your current rent.

Typically you get high rents per sqft for smaller units.

The VOA woudn't contact the local officer, they will simply review when the change comes through on the list.

You may be ok if the shared areas are small.

Normally the rates bill is due by the occupier not the landlord. As it is multiple companies under one lease it may have been simpler for your landlord to to retain the responsibility for the rates and charge you. Normally when doing a lease I would pass the rates requirement with the other utilities to the tenants.

Jon

 

[Rob C]

Hi Jon, good to know that rateable value is not based on the actual rent, if so, am I right to say that the actual rent wouldn't have any impact for the VOA valuation of our case?
I am still struggling to fully grasp why and how they would re-rate the property? would you have the patience to please clarify this to me?
Our rate value is £60-£90 (two different value for each floor) and the landlord is concern that VOA could re-rate the premises to office or gallery value which is £210psm. He saying that this happened is some other of his premises. This would obviously negating the advantage of the split. And I still wonder if we would have to backdate the payments of the higher business rate bill as well? which it would be a possibly a big sum, especially if we would backdate our appeal to November 2021 (when we moved into the premises)

 

[JonWhite_Adler]

The revaluation would be to reflect the new leases. They would value these as it would now be new premises from a valuaiton persective. You woudn't simply take the values from the current listing and reuse these. Some areas which are valued as storage (for example) wouldn't be storage in a lease for an office use of that space.
The valuation would be on the current use. Without taking a detailed look at the valuaitons and your use etc I couldn't comment on what it might change to, and there is a reliance issue.

I'm not sure you would be able to back date the change as it would be from the date of the new lease, unless you back dated the new leases.

 

[Rob C]

Thanks so much for the clarification Jon. Our agent and our landlord will talk this matter directly with each other, let's see what it comes out.. thanks so much everyone for the advice.

 

[shakess88]

Hi Rob, stumbled across this topic whilst looking for something else..

I generally agree with Jon's information so far, but want to add the old 2017 Rating List is now closed, so any outcome from any Challenge you make to current Rating List entry will be limited to an effective date of 1st April 2023 (the start date of the new Rating List). The 2017 Rating List closed on 31st March 2023, so you will not to be action any changes before this date. Good luck with it all.