In the last of two articles on the financial crisis facing the owners and occupiers of commercial property following the business rates revaluation earlier this year, Mark Parnall, director with Parnalls in Launceston, explained the process for appealing against your assessment. In this article, he considers available rates exemptions and reliefs, options for reducing your overheads to relieve financial pressure and the process you will need to go through if you decide your business is no longer financially viable.
Click here https://parnalls.com/business-rates-financial-ticking-time-bomb-part-1/ to view the first article.
Exemptions and reliefs
Some businesses are entitled to a business rates reduction through a scheme of reliefs, while others may be able to benefit from a complete exemption. The rules are complex, with some exemptions and reliefs being applied automatically and others requiring a formal application, either to the VOA or to your local council.
An exemption may be available for:
- agricultural land and buildings;
- property used to train or provide for the welfare of disabled people; and
- registered places of worship and church halls.
Empty properties are usually exempt for either three or six months, depending on the type of property. Listed buildings or those with a rateable value of less than £2,900 are exempt until they are reoccupied.
Properties owned by charities and amateur sports clubs can benefit from empty property relief until they are reoccupied, but only if the new occupant is likely to be a charity or sports club, as appropriate.
Relief may be available if:
- you are a small business occupying one property with a rateable value of less than £15,000 or two or more properties with a combined rateable value of less than £20,000 (£28,000 in London);
- your business is in a rural area with a population below 3,000;
- you are a charity or community amateur sports club; or
- if you have started up a business, or relocated an existing one, to a designated enterprise zone.
Temporary relief may also be available if your premises have been affected by severe local disruption, such as extensive building works or a long-running road improvement scheme.
The amount of the relief granted will depend on your circumstances and the relief type applied for.
Extra help from the government
To help those businesses most seriously affected by the 2017 revaluation, the government has set aside £435 million to help soften the blow. Of this:
- £110 million has been earmarked for businesses which are no longer eligible for small business rate relief or rural rate relief to ensure that, for the year 2017 to 2018, these businesses will not have to pay an increase of more than £600 for the year or £50 a month;
- £300 million has been given to councils to add to their discretionary fund so they can help support businesses in their areas that they believe are most in need of help; and
- a large chunk of the remainder will be used to provide a £1,000 discount on the business rates payable for 2017 to 2018 by pubs occupying premises with a rateable value of less than £100,000.
In addition, if as a result of the revaluation the amount you will have to pay in business rates has gone up or down by more than a specified amount, transitional relief will be available from a £3.6 billion fund to ensure changes to your bill are phased in gradually over the next five years. The rules are complex, but in summary:
- small properties, defined as those having a rateable value of less than £20,000 (or £28,000 in London), will not see their ratings bill increase by more than 5 per cent in 2017 to 2018 and thereafter future rises will be capped according to a stepped system;
- medium-sized properties, defined as those having a rateable value of between £20,001 (or £28,001 in London) and £99,999, will not see their bill increase by more than 12.5 per cent in 2017 to 2018 and thereafter will be subject to a capped step increase; and
- large properties, defined as those having a rateable value of more than £100,000, will not see their bill increase by more than 42 per cent in 2017 to 2018 and will be subject to fluctuating stepped changes for the following four years.
Details of the transitional provisions if your rates bill has deceased can be found by clicking on the following link: https://www.gov.uk/apply-for-business-rate-relief/transitional-relief
If, despite the package of support being provided, the increase in your business rates liability means that you face the very real prospect of being unable to continue to trade, serious consideration will need to be given as to whether you want to try to save the business or simply close it down.
If you want to continue to trade then there are a number of possible options to consider, including applying to your local council for a short-term discount on the amount you have to pay through their business rates hardship fund. Every council operates one, although eligibility will be dependent on you being able to show that you will be in serious financial difficulty if a discount is not applied and it is in the interests of the local community that help is provided. You could also approach your landlord to see if they would be prepared to reduce your rent or, if your situation is particularly grave, you could consider making proposals to your creditors more generally about how your debts might be restructured to enable you to continue to operate.
If you have made the difficult decision to close your business down, then it is important that this is done in an orderly manner. You will have to negotiate the end of your lease, if you have one, and ensure that all your debts are settled. If you trade through a company then you will also need to take steps to wind the company up if it is no longer needed.
If you are unable to pay your debts in full then consideration will need to be given as to whether you should declare yourself bankrupt or your business insolvent. If you trade through a company then this decision will need to be taken quickly to ensure that you do not fall foul of the rules governing wrongful or fraudulent trading, for which the penalties can be very severe.
Your solicitor can advise you on your options and help you achieve the best outcome possible.
For further advice on the availability of exemptions and reliefs, or for help in keeping your business afloat in the coming months or years, please contact Mark Parnall on 01566 772375 or email email@example.com