Business rates are a significant overhead for many businesses, so it is not surprising that many companies appeal their rates liability. In some parts of the country, rates are more than the annual rent. The Mazars case has now set for the Supreme Court, and at the time of going to press, we're waiting for the decision.
Briefly, a firm of accountants has office space on two floors of the same eight storey office block near Tower Bridge. The floors in question are the second and sixth. The accountants say these floors, although not contiguous, should be treated as a single space for the purposes of business rates. HMRC disagree: they say the two floors should each be assessed on their own. The larger space is less valuable so the rates would be correspondingly lower.
The broad lesson from this case is that it pays to check whether you have any grounds to challenge your business rates. If, like Mazars, you have two separated floors in one building, and want to know the result as soon as possible, click here and we will let you know the outcome. The decision of Woolway (VO) v Mazars LLP will be reported in a future edition of QIA.
Business rates depend on periodic revaluation of properties. However, each valuation brings winners and losers, meaning the exercise can have political consequences. Furthermore, rates are payable on the use of business space, so companies that trade from shops pay tax while retailers who are predominantly web-based do not. In that sense rates are a tax on bricks rather than clicks. The 2015 valuation was postponed to 2017 by the coalition government. The small business manifesto launched by the Conservatives before the election pledged a review of business rates to help High Street businesses that are "striving and grafting and trying to do their best". It remains to be seen whether the promised review will comprise a root and branch overhaul, or mere pruning of the existing system.
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