Backdated business rates demands for businesses who occupy more than one floor in a multi-let building are ‘particularly unfair’ a committee of MP’s has said.
Following the recent Supreme Court decision of Woolway v Mazars the Valuation Office Agency (VOA) is now assessing each floor separately in multi-let buildings if an occupier has to access an adjacent floor in a building via the common parts (lift or staircase).
In most cases, the splitting up of these floors has been backdated to April 2015. Some, however, went as far back as 2010. With the removal of quantum allowances or small business rate relief, this has given rise to some significant backdated increases in both rateable value and resultant liability.
However, the splitting of assessments per floor hasn’t been carried out in a uniform manor and there are currently many inequities in the system.
It has also given rise to considerable despair on behalf of ratepayers who have received numerous and confusing rates bills with an end result of having a much higher liability! Ratepayers had been paying what they considered to be the correct tax over the last 5 years and the ‘staircase tax’ has therefore been met with considerable anger in the business community.
Previously, there was a much simpler rule for business occupiers – where a business occupied two or more adjacent floors within a multi-tenanted building, they would for rating purposes form a single assessment. Having a single assessment has many advantages to the ratepayer including the potential for a lower valuation per £/m and the potential for allowances.
The government has now fully acknowledged the unfairness of the current situation and has committed to reversing the unintended consequences of the Mazars ruling. The aim will be to reinstate VOA practice to that as it was prior to the decision. This will be in the form of revised legislation that will allow the VOA to ignore to some extent the new Mazars rules.
Sanderson Weatherall will continue to provide regular updates as the situation develops and once the legislation is finalised, and anticipate that proposals to take advantage of the new regulations could be made by the end of the financial year.
To discuss the potential implications of the new legislation on your own business, including estimates on revised liabilities for the property you occupy, please speak to the SW Rating Department.