Business from home-business rates!
Discussion
Long story short I've constructed a garage & office at home that was proposed to be 100% business use. Due to this we put a claim in for the VAT. We've done lots of other work to the property which hasn't been claimed for so we've paid a considerable sum of VAT on that. The VAT office aren't happy & have basically emailed me what I see as a bribe! I don't want to post the ins & outs here but to summerise they are saying reduce the percentage of what you are claiming to a "reasonable percentage" & we won't pursue you for business rates. My question is, what percentage of the use of the garage & office has to be private to avoid business rates?
My accountant is on holiday until Monday but it would be good to know what people on here think.
Thanks
My accountant is on holiday until Monday but it would be good to know what people on here think.
Thanks
Hi Eric, glad you replied 
They are using it as a threat as far as I can see. Planning is all above board, in fact building control signed it all off today
The exact wording from the email :-
"Do you pay or have you registered for business rates on the garage & study? They are liable for business rates if the room or rooms are used exclusively for non-business purposes" (er, doesn't she mean if they are used exclusively for business purposes?!)
& to be super pedantic :-
"The installation of the fridge/freezer in your garage is private use, and thus cannot be ignored, whatever the area it uses. "
So my beer fridge sat in the corner means it's not 100% business use. Again, 100 wording from the email :-
"Alternatively. I am prepared to accept a reasonable proportion of the overall construction costs as recoverable. Please let me have details of the recoverable percentage you consider acceptable?"
They are using it as a threat as far as I can see. Planning is all above board, in fact building control signed it all off today The exact wording from the email :-
"Do you pay or have you registered for business rates on the garage & study? They are liable for business rates if the room or rooms are used exclusively for non-business purposes" (er, doesn't she mean if they are used exclusively for business purposes?!)
& to be super pedantic :-
"The installation of the fridge/freezer in your garage is private use, and thus cannot be ignored, whatever the area it uses. "
So my beer fridge sat in the corner means it's not 100% business use. Again, 100 wording from the email :-
"Alternatively. I am prepared to accept a reasonable proportion of the overall construction costs as recoverable. Please let me have details of the recoverable percentage you consider acceptable?"
I should add, yesterday the threat was a site visit to inspect the woks (got no problem with that, it's all there to see).
Seems she's sat down with her manager as detailed in her email & they've come up with lots of points to try & make my life difficult.
Alternatively take the offer & well leave you alone!
At the moment I feel like saying f
k you, I'll pay the VAT & will be de-registering (now below the threshold and deal mostly with private customers).
I must have paid well over £100k in VAT to these aholes and when you try & get some back with a legitimate claim you get this! Reading up on their past antics online though they couldn't care less, seems they take the short term view & are happy to see companies go to the wall for a short term gain in their favour.
Seems she's sat down with her manager as detailed in her email & they've come up with lots of points to try & make my life difficult.
Alternatively take the offer & well leave you alone!
At the moment I feel like saying f
k you, I'll pay the VAT & will be de-registering (now below the threshold and deal mostly with private customers).I must have paid well over £100k in VAT to these a
holes and when you try & get some back with a legitimate claim you get this! Reading up on their past antics online though they couldn't care less, seems they take the short term view & are happy to see companies go to the wall for a short term gain in their favour.If you de-register you would have to repay the VAT you had claimed - so that wouldn't be smart.
I'd just call their bluff. If the only thing they can say is that your beer fridge is in the "business area", just move the beer fridge elsewhere.
And show them the clearance from the local council proving that the threat of business rates is non-existent.
I'd just call their bluff. If the only thing they can say is that your beer fridge is in the "business area", just move the beer fridge elsewhere.
And show them the clearance from the local council proving that the threat of business rates is non-existent.
Turning it the other way. If the beer fridge means the area is no longer 100% business use then I'll reduce the vat claim by 1% (the fridge takes 0.01% of the space) and business rates would not apply? Is there a set percentage of business use where business rates would or rather could not be applied? They can't have it both ways! !
Businesses are allowed to make coffee and tea - do coffee and tea not require a fridge in which to keep milk?
Perhaps if you claim 100% they will come along and have a look. 90% might encourage them to stay in their cosy offices drinking their own coffee and tea with milk from their business fridge?
Perhaps if you claim 100% they will come along and have a look. 90% might encourage them to stay in their cosy offices drinking their own coffee and tea with milk from their business fridge?
Chris will no doubt be along at some point.
Business Rate assessments are assessed by Valuation Office Agency, This week VOA is an executive agency, sponsored by HM Revenue & Customs.
Bit of guidance here - https://www.gov.uk/introduction-to-business-rates/...
My initial thoughts are that as a pretty much dedicated area to the business (let's not argue about the beer fridge!), it probably should be in the Rating List.
The VOA would probably not realise this unless someone shops you - but if they do, subject to some recent legislation that I have not checked, they would be able to backdate any bill. You may not like this and may prefer to get it assessed now and get the full vat back.....
I would not expect a particularly large assessment for a garage at home.
PS
Interesting Fact - some of the relevant case history came from a civil servant (might have been Inland Revenue) who put an application in to get a lower council tax band due to business use at home. Not only did this fail, but she got an assessment for Business Rates too.
Business Rate assessments are assessed by Valuation Office Agency, This week VOA is an executive agency, sponsored by HM Revenue & Customs.
Bit of guidance here - https://www.gov.uk/introduction-to-business-rates/...
My initial thoughts are that as a pretty much dedicated area to the business (let's not argue about the beer fridge!), it probably should be in the Rating List.
The VOA would probably not realise this unless someone shops you - but if they do, subject to some recent legislation that I have not checked, they would be able to backdate any bill. You may not like this and may prefer to get it assessed now and get the full vat back.....
I would not expect a particularly large assessment for a garage at home.
PS
Interesting Fact - some of the relevant case history came from a civil servant (might have been Inland Revenue) who put an application in to get a lower council tax band due to business use at home. Not only did this fail, but she got an assessment for Business Rates too.
Thanks for that. As above I'm thinking reducing the claim to 90% is more than fair. I'll see what my accountant says (ex HMRC VAT inspector!) & take it from there. I'll sleep better at night knowing I can stick a lawn mower in there if I want to & not get stung for back dated VAT because I claimed 100%. I'll let you know how it goes
I don't particularly want it having business rates on it no matter how small. I'd much rather reduce the VAT claim & know I'm not going to ass raped in the future should I decide to watch non business TV in my study for some reason :0
I don't particularly want it having business rates on it no matter how small. I'd much rather reduce the VAT claim & know I'm not going to ass raped in the future should I decide to watch non business TV in my study for some reason :0
Dave_ST220 said:
Hi Eric, glad you replied They are using it as a threat as far as I can see. Planning is all above board, in fact building control signed it all off today
The exact wording from the email :-
"Do you pay or have you registered for business rates on the garage & study? They are liable for business rates if the room or rooms are used exclusively for non-business purposes" (er, doesn't she mean if they are used exclusively for business purposes?!)
& to be super pedantic :-
"The installation of the fridge/freezer in your garage is private use, and thus cannot be ignored, whatever the area it uses. "
So my beer fridge sat in the corner means it's not 100% business use. Again, 100 wording from the email :-
"Alternatively. I am prepared to accept a reasonable proportion of the overall construction costs as recoverable. Please let me have details of the recoverable percentage you consider acceptable?"
Just in case you didn't realise, planning approval has nothing to do with building control approval. There is no connectivity between the two. If you need planning approval for the office use but don't have it then please don't think that because you have building control sign off that this means that the office is lawful. If you do have planning permission then all is fine and dandy (if you do actually need it!) but if not then please contact your local authority planning department and make sure that there will be no problems. You could always apply for retrospective consent. They are using it as a threat as far as I can see. Planning is all above board, in fact building control signed it all off today The exact wording from the email :-
"Do you pay or have you registered for business rates on the garage & study? They are liable for business rates if the room or rooms are used exclusively for non-business purposes" (er, doesn't she mean if they are used exclusively for business purposes?!)
& to be super pedantic :-
"The installation of the fridge/freezer in your garage is private use, and thus cannot be ignored, whatever the area it uses. "
So my beer fridge sat in the corner means it's not 100% business use. Again, 100 wording from the email :-
"Alternatively. I am prepared to accept a reasonable proportion of the overall construction costs as recoverable. Please let me have details of the recoverable percentage you consider acceptable?"
I have full planning permission. I'd assumed you couldn't get building control to sign off an extension without it. Anyway, the planners were well aware what the use of the garage would be as they stipulated non business use which obviously I queried as it was going to be used for business use. Their answer was the same as my solicitors-they are referring to businesses where people visit the property etc.
surveyor said:
Chris will no doubt be along at some point.
Business Rate assessments are assessed by Valuation Office Agency, This week VOA is an executive agency, sponsored by HM Revenue & Customs.
Bit of guidance here - https://www.gov.uk/introduction-to-business-rates/...
My initial thoughts are that as a pretty much dedicated area to the business (let's not argue about the beer fridge!), it probably should be in the Rating List.
The VOA would probably not realise this unless someone shops you - but if they do, subject to some recent legislation that I have not checked, they would be able to backdate any bill. You may not like this and may prefer to get it assessed now and get the full vat back.....
I would not expect a particularly large assessment for a garage at home.
PS
Interesting Fact - some of the relevant case history came from a civil servant (might have been Inland Revenue) who put an application in to get a lower council tax band due to business use at home. Not only did this fail, but she got an assessment for Business Rates too.
The case referred to can be found here http://www.landstribunal.gov.uk/judgmentfiles/j6/R... and indeed involved a Inland Revenue employee who was working from home. Further insight on the issues of working from home can be found in this article http://www.andrewbibby.com/telework/businessrates.... which mentions things like Capital Gains Tax.Business Rate assessments are assessed by Valuation Office Agency, This week VOA is an executive agency, sponsored by HM Revenue & Customs.
Bit of guidance here - https://www.gov.uk/introduction-to-business-rates/...
My initial thoughts are that as a pretty much dedicated area to the business (let's not argue about the beer fridge!), it probably should be in the Rating List.
The VOA would probably not realise this unless someone shops you - but if they do, subject to some recent legislation that I have not checked, they would be able to backdate any bill. You may not like this and may prefer to get it assessed now and get the full vat back.....
I would not expect a particularly large assessment for a garage at home.
PS
Interesting Fact - some of the relevant case history came from a civil servant (might have been Inland Revenue) who put an application in to get a lower council tax band due to business use at home. Not only did this fail, but she got an assessment for Business Rates too.
The reality is that depending how large your garage and store is, you would probably qualify for small business relief, which with the current offer of double relief, might mean no business rates payable anyway.
However I would of thought it would be far better to have it allocated for residential use when it comes to sale etc.
I have read somewhere that 40% of rural homes have businesses run from them. Ask them what their boundary would be between doing it from a study and doing it from a converted garage. Point out that you pay VAT and Corporation Tax as well, and that the business is a "large kitchen table" business.
Dave_ST220 said:
I don't want any part of it being classed as business use as far as the VO are concerned. I'll reduce the VAT claim following discussions with my accountant. I have to say the blackmail attempt by HMRC stinks.
So you don't want it classed as business use but you want to claim the VAT 
Sounds like the VAT office got the fair result with minimal effort.
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