A landmark High Court ruling on 28th June 2012 has effectively legalised ‘imaginative’ empty business rates avoidance tactics. The judgement will be welcomed by landlords and rate payers suffering from the high costs of empty property rates and will give added impetus and support to the use of empty rate avoidance schemes. The use of the tactics reflected in the Makro judgement could allow businesses with empty properties to avoid up to 80% of their annual empty business rates tax burden on an ongoing basis.
The case involved the use by Makro Wholesaling of just 0.2% of the floorspace of a 140,000 warehouse in Rowles Green, Coventry, the nominal use was the storage of business documents. Following an unsuccessful Magistrates Court case in 2011, Makro appealed the decision to the High Court. Judge Jarman QC ruled that Makro’s use of the warehouse to store 16 pallets of documents between November 2009 and January 2010 was sufficient to trigger a further 6 month period of exemption from empty rates when the stored files were removed and the entire building was vacated again.
There have been renewed calls in recent months for the Government to scrap empty property rates. A recent investigation by Estates Gazette revealed that Councils alone pay around £50 million a year in empty rates in England and Wales which is an unnecessary drain on local community resources.
In May 2012, Chancellor George Osborne agreed to review empty rates legislation and asked MP Julian Sturdy to look at proposals on how the existing empty rates system could be amended to take account of the changed economic circumstances affecting businesses.
bdt have been successfully advising clients on empty rates avoidance strategies for many years, well before the changes in empty rates legislation in 2008. The new High Court judgement may substantially assist this process in the future. If you have any empty properties on which you have a long term empty rates liability, BDT will be able to assist you in substantially reducing this tax burden.
Please do not hesitate to contact Howard Elliott for further information or to discuss your circumstances.
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4th July 2012