Councils, concerned about applications for empty business rates mitigation, are being targeted by legal practices offering to challenge rates mitigation strategies on their behalf.
Whilst of course this is a reasonable business practice, it now appears that ill-advised landlords have succumbed to either bullying tactics by these firms, or have implemented poorly executed occupations which fail to meet all the necessary technical and evidential criteria.
For instance, in March 2017 a successful challenge was made to an intermittent occupation involving a town centre retail unit where the landlord had arranged for furniture and janitorial supplies to be stored by a 3rd party company – in principle, a perfectly legitimate case for a period of exemption.
The solicitors (let’s call them ‘The Firm’) advised that detailed enquiries be made by the council and extensive evidence was requested in order to ‘pick apart’ what appeared to be a genuine occupation. In this case the claimant, under pressure, capitulated without going to court and paid the outstanding business rates in full. ‘The Firm’ then claimed that such a scheme was discredited.
For those unfamiliar with the intricacies of intermittent occupation, a landlord IS entitled to gain a new 3 month period of empty property rate exemption (6 months for industrial and warehouse premises) if the property has been legally occupied for a minimum of 43 days.
In order for any short-term occupation strategy to succeed, it must meet the four established principles of rateable occupation;
- It must not be transient (hence 43 days or more)
- There must be actual occupation
- The occupier must have paramount control
- The occupation must be of some benefit to the occupier
The case establishing the principles of intermittent occupation was “Makro”, where a council objected to an application from Makro, a PLC business, whose warehouse was used for storage by a related company with only 0.2% of the floor area being occupied. The landlord’s application was held up in court based on there being no actual minimum level of physical occupation required to meet the requirements of rateable occupation provided that the criteria of rateable occupation was met. Subsequent case law has served to reinforce the principles of the case.
What the “firm’s” case highlights is that property owners are giving into unreasonable pressure. By leaving the mitigation of empty property rates to their site managers, managing agents or by employing companies without the necessary competence and experience to implement the appropriate scheme they are unable to withstand legal challenges. The result of this is that they are paying unnecessary rates.
Since 2010, acting on behalf of some of the most prominent UK property companies and institutions, VSM have built an unparalleled reputation in the field of business rates mitigation. We believe every situation requires a bespoke solution (it’s not always intermittent occupation) – so for some FIRM advice before you act, we suggest speaking to one of our directors.
VSM believe that Knowledge is Power.
Knowledge of the industry of the past and present helps us guide our clients to the future. This is our main USP to our clients.
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Vacant Space Management Ltd
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Tel: 01908 660552