_Government have excluded Medical Facilities from Business Rates Exemption

This article is constantly updated to reflect the Governments response to support businesses during this pandemic and should be read in full on each visit to our website. 

The Government has notified the EU of its intention to bring forward an immediate change to the UK’s tax system in order to support Businesses during the COVID-19 outbreak by providing grants and business rates relief. This requires approval from the EU Commission as our regulations are currently aligned with the EU during this transitional period.

Failure to obtain this approval means we would be subject to a significant fine due to a breach of State Aid rules which restricts such support to a maximum of 200,000 Euros over a period of 3 years. However, the EU have drafted a Proposal to increase State Aid to 500,000 Euros and to allow Government loans to companies at subsidised interest rates, which to some extent, mirror our Chancellors proposed support package to UK Businesses.

However even if the EU Commission refuse to extend the support beyond their increased State Aid Proposals the UK could use the recent ruling in favour of the Danish Government which found that additional support above state aid was accepted as COVID-19 was classified as an exceptional occurrence under the meaning of Article 107(2)(b) of the  Treaty on the Functioning of the European Union.(TFEU).

Therefore provided either the EU agrees to exempt the UK  or the Government seeks to rely on the Danish ruling then the following measures will proceed.

• All qualifying Retail, Hospitality and Leisure businesses in England will obtain a 12 month business rates exemption. There is no rateable value threshold. 

The Government have now released the guidance to Councils on the Business Rates Retail Discount Guidance and for the first time businesses that are CLOSED as a result of the Governments advice on COVID-19 will be treated as occupied for this relief. This is very welcome and clearly is aligned with the current situation as opposed to previous retail relief where the property had to be occupied.

The relief guidance was clearly rushed as it still refers to qualifying criteria such as ensuing the premises are used wholly or mainly for the stated purpose which clearly no longer applies in these circumstances.

However, the Government have continued to exclude Medical, Financial & Professional Services along with Post Office which seems extraordinary as they will equally be affected. How can it be rationale to exclude the very front line on this pandemic, Doctors Surgeries from this exemption?

• Businesses in England who qualify for small business rates relief will be eligible for a grant of £10,000. The criteria for qualifying can be found here.     
• Retail, Hospitality and Leisure businesses with a rateable value between £ 15,000 and below £ 51,000 will be eligible for grants of £ 25,000.

Although the above proposals are welcome it is a concern that one of the key drivers of our economy, the vital office sector has been ignored. This clearly needs to be considered as the current open plan environment of most offices will restrict the ability of businesses to continue to function as normal.

Although remote working will reduce the impact, this won’t be possible in all cases. We consider the Government should extend the proposals to grant relief to offices which can no longer operate normally during this outbreak.

At the present time the following measures are also available to businesses: 

a) Partial Empty Rate Relief

Local Authorities have the discretion to grant partial rates exemption on any non-domestic assessment where the area involved is only temporarily vacant.    

b) Empty Relief

When a property becomes vacant it is entitled to mandatory relief from rates, Commercial & Retail (3 months) and Industrial (6 months). 

c) Intermittent Occupation

If the property is likely to remain vacant after the expiration of the exemption periods then full rates would be payable. However, by establishing intermittent occupation this can reset the exemption. For more details on this specialist area please contact Knight Frank.

d) Covid-19 Reductions

The rating legislation enables businesses to make a claim for a reduction in their business rates where there has been a ‘material change to the locality’. This is a complex area of the legislation as there is no detailed definition of what constitutes a qualifying material change and we have to rely on evolving case-law precedents. However, the previous Foot & Mouth outbreak was accepted as a material change and as this situation increases it is likely that the impact of Covid-19 will be sufficiently observable within the locality to also succeed. It is important to note that the timing of the claim cannot be retrospective so we would recommend getting in touch now so we can prepare your case. 

e) 2017 Rating List

The Government are now consulting on the closure of the right to challenge your current business rates assessment. At present this is likely to be in just over 12 months and if you haven’t already had a Professional review your assessment we would urge you to take action.

For further advice please contact us.