Knowledge Hub | Articles

04 February 2013

Building not divisible for business rates purposes

About the only plus point of empty commercial premises is that they attract relief from rates for a minimum of three months (six months in the case of industrial premises).

Following a recent case in which minimal use of premises for the storage of legal documents was deemed to be ‘occupation’, which allowed a company to restart the rates holiday after a period of occupation, comes a case which illustrates another aspect of minimal occupation.

The case involved a charity which leased premises in which it installed Bluetooth and Wi-Fi transmitters that were capable of being moved around. The building was otherwise unoccupied.

The lease under which the charity occupied the building transferred the liability to pay rates to it. A charity is entitled to a minimum of 80 per cent relief from business rates.

The local authority argued that the parts of the building which had no transmitters were not occupied for charitable purposes and were therefore subject to rates at the full amount.

The magistrates ruled that it was impossible to separate the ‘occupied’ and ‘unoccupied’ parts of the building. It was therefore wholly occupied by the charity for business purposes and qualified for 80 per cent rate relief.

Even minimal occupation counts as ‘occupation’ for the purposes of assessing business rates.

In his recent pre-Budget statement, Chancellor of the Exchequer George Osborne announced that, subject to consultation, newly built commercial property completed in England and Wales between 1 October 2013 and 30 September 2016 will be exempt from empty property rates for the first 18 months, up to the ‘state aid limits’. In addition, the temporary doubling of small business rate relief has been extended for a further year from April 2013.

Contact commercial property partner Michael Larcombe for legal advice on any property-related matter.

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