Many landlords of commercial property are suffering because their tenants have left or gone into liquidation.
If the building is empty and unused no business rates are due for the first three months it is vacant, but most businesses must start to pay the business rates again after three months. An extension of this three month relief period can be claimed for certain types of building (industrial, listed, or very small rateable value), or where the owner is a charity or community amateur sports club.
There is also an exception to the requirement to pay business rates where the owner is a company in liquidation and doesn’t occupy the property, or the owner is a company in administration. However, these exceptions have been used within tax avoidance schemes by certain property developers. They form special purpose vehicle (SPV) companies to hold the empty properties, and then put those SPVs into liquidation, avoiding the business rates.
A number of local authorities have challenged these business rates avoidance schemes at the Supreme Court, and the case will now proceed to a full trial. The use of SPVs to avoid business rates may be ended with rates becoming payable for past years.
If you are facing a business rates bill on an empty property we advise you to contact the local council as you may be able to claim hardship relief for those rates.
Written by the Tax Advice Network