Small business rates - more than one property

[PatrickSS]

Rach88 and others - thank you for your responses.

The current interpretation of the legislation does seem extraordinary.

A company with a single property with a rateable value of £12,000 pays no rates.

And, the Government has taken the trouble to introduce a taper from rateable values of £12,000 to £15,000 for one property, presumably to help small companies.

But the legislation charges full whack for a company that has two premises with RV of £3,000 each

ie 0.466 x (3,000+3000) = £2,796

I assume that this can't possibly be the intention.


In our own case, we have two premises, a workshop (RV £2,950) and offices (RV £8,900) = £11,850 total.

West Berks Council is saying we would pay nothing if it were a single property, but that we have to pay full whack, £5522, because it is two properties with the second RV over £2,900.

It seems likely that this legislation is intended to HELP slightly larger companies that have two premises with RVs of say 12,000 + 2,500 not victimize us.

The Valuation Officer told me that my council can apply common sense and discretion, but West Berks seems to be using a legalistic approach.

Rach88, I looked at the legislation that you quoted - but do you think that it is being interpreted correctly?

Or does the Government have a strange vendetta against small companies with two or more premises?

And what happens in other parts of the country?

Thx Patrick

 

[rach88]

I agree it doesn't make sense, but those are the rules. I think the legislation is fairly clear, unfortunately.

It does seem to be a disincentive to businesses expanding and taking on additional premises. The only concession to this is the 12 month grace period when first taking on a second property.

You have several options you could try:
1. Try applying to the council for discretionary rate relief / hardship relief (if appropriate). Councils do have powers to grant discretionary rate relief. However, given their budget constraints, they are very reluctant to do so. That being said, they have been given an additional pot of money to help with the impact of the 2017 revaluation, so might be worth a go. If you are in genuine hardship, explain the position to them.
2. Consider appealing the £2,950 rateable value to see if you can reduce it below £2,900. Be aware that with the new system "Check, Challenge, Appeal", it may be getting on for three years before you get to the appeal stage. Hardship cases will be fast-tracked. If you manage to get the RV below £2,900 you will qualify for SBRR on your larger property again but you will likely still need to pay rates on the smaller one.
3. Set up a new company to occupy the other property. This is the loophole. But there are costs incurred with setting up a second company and the savings may not be worth the cost. The second company will need to genuinely be in occupation.
4. Are the two properties adjacent to each other? If so, you could try to merge them into a single assessment. This has become more difficult following recent case law but may be worth a try if access between the two properties is possible without stepping onto communal / public land.
5. If all else fails you could sublet a small part of your warehouse and then apply to split the rating assessment. The remainder would be below £2,900. Not sure if that is a practical suggestion for you, but could work for some people. Or, move to a warehouse with a slightly lower RV!

Were you receiving small business rates relief before the April 2017 revaluation?

 

[PatrickSS]

Rach88 thank you very much for your very helpful reply.

I find it extraordinary that small businesses are just taking this on the chin - it is obviously not the intention of the legislation. Why don't they write to their MPs? ! - I will do this once the dust has settled in the next few months.

I'm guessing that the intention was to help slightly larger businesses that take on one or two small extra properties, where the legislation intends that they will not lose their main relief.

I very much doubt that the idea was to attack very small businesses with say two premises with RVs of £3,000 each.

It's an example of making things far too complicated.


Yes we were getting rates relief last year.

West Berks Council sent us explanatory notes which state that our bill is not allowed to go up by more than 5%.

The rates demands that we received represent an increase of 106% !

So I've asked for revised demands with no more than a 5% increase.

Thx very much for your help

Patrick

 

[rach88]

I don't think the 5% transitional cap will apply here, I'm afraid, as transition does not protect you from losing reliefs like small business rates relief. The maximum increase for the purposes of transition is calculated using a base liability which is your RV as at 31/3/2017 x lower multiplier for 2016/2017. i.e., your liability before the application of any reliefs.

As many businesses were losing their SBRR as a result of the revaluation, the government came under pressure to do something so they brought in the £50 a month cap on increases for 2017/18 for those coming out of SBRR. You should benefit from this, at least?
"If the 2017 revaluation means you no longer get small business relief, your bill won’t increase by more than £50 a month from 1 April 2017 to 31 March 2018."
https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

I agree that it would make much more sense if a business could claim relief on all their properties so long as the combined RV was below the threshold.