Business Rates Hardship Relief
Discussion
My father shut the gates permanently at his nursery/garden centre last September after 50-odd years of trading.
In January he was shocked to start receiving demands for payment of full business rates (c. £25000 a year). He had naively assumed that as he was no longer going to be operating his business no BRs would be due. Wrong! After an initial 3 month 100% abatement rate the sum due goes back up to the full amount.
Of course at 80 years of age and with no matching income to fund these BR from, he is starting to struggle financially. It's no secret that the business was no longer making a profit from trading and closure could not be avoided.
The standard HMRC line on Hardship Relief is:
In England, councils can reduce your business rates bill with hardship relief.
To be eligible, you must satisfy your council that both:
a) you would be in financial difficulties without it
b) giving hardship relief to you is in the interests of local people
Now, a) is self evident in his circumstances but we are both scratching our heads to think of any examples of where the latter clause may be realistic. Does anyone know of an example? Both clauses must exist for the relief to be available.
It may just be the case that he will have to default on the payments when they are due and risk the Magistrates Court option and haggle for a payment plan based on his financial hardship and ability to pay.
In January he was shocked to start receiving demands for payment of full business rates (c. £25000 a year). He had naively assumed that as he was no longer going to be operating his business no BRs would be due. Wrong! After an initial 3 month 100% abatement rate the sum due goes back up to the full amount.
Of course at 80 years of age and with no matching income to fund these BR from, he is starting to struggle financially. It's no secret that the business was no longer making a profit from trading and closure could not be avoided.
The standard HMRC line on Hardship Relief is:
In England, councils can reduce your business rates bill with hardship relief.
To be eligible, you must satisfy your council that both:
a) you would be in financial difficulties without it
b) giving hardship relief to you is in the interests of local people
Now, a) is self evident in his circumstances but we are both scratching our heads to think of any examples of where the latter clause may be realistic. Does anyone know of an example? Both clauses must exist for the relief to be available.
It may just be the case that he will have to default on the payments when they are due and risk the Magistrates Court option and haggle for a payment plan based on his financial hardship and ability to pay.
The property is going to be developed as a multi-home residential site. He has received some money from the developer up front which he will have to pay CGT on in January. Meanwhile he has to continue to pay the full business rate. He’s seeking a way to get relief from / avoid paying that. He’s playing his cards very close to his chest over what the developer has paid up front and when the site will be cleared for the construction to start. I think he has a case to have the property removed from the business rates list as it is already economically unviable as a garden centre business. Trouble is with greenhouses, outbuildings and random infrastructure still in situ, it superficially looks like a dormant business
Does the council know of the resi conversion? It will when planning starts...
Hard to feel much sympathy for the br bill given the plans for the site and that money has already been paid over by the developer. Better timing or a smarter deal (to put the liability to deal with br on the developer) would have avoided it.
Hard to feel much sympathy for the br bill given the plans for the site and that money has already been paid over by the developer. Better timing or a smarter deal (to put the liability to deal with br on the developer) would have avoided it.
I am one of the business rates experts that lurk around here.
Approximately zero chance of hardship relief I'd say. Hardship relief is effectively funded through council tax receipts which is why iit talks about benefiting local residents etc. So relief might be given to a corner shop or something unlikely to be given to a closed garden centre!
It is difficult to get a property out of the List unless it has been demolished. Can you PM me with the post code of the property and I'll have a look at the valuation online to see if I can think of any angle.
Approximately zero chance of hardship relief I'd say. Hardship relief is effectively funded through council tax receipts which is why iit talks about benefiting local residents etc. So relief might be given to a corner shop or something unlikely to be given to a closed garden centre!
It is difficult to get a property out of the List unless it has been demolished. Can you PM me with the post code of the property and I'll have a look at the valuation online to see if I can think of any angle.
JPJPJP, Surveyor & ChrisGr
Thanks for your replies. I agree with your points, deal could have been better and shared the liability. Sympathy in the dictionary etc etc. He took his solicitors advice (probably not a commercial property specialist) and didn’t go for the more joint venture the developer suggested. He’s comfortable(ish) with that decision and now has to deal with the fallout from that. Glad you’ve popped your heads up and offered opinions. Thanks.
Thanks for your replies. I agree with your points, deal could have been better and shared the liability. Sympathy in the dictionary etc etc. He took his solicitors advice (probably not a commercial property specialist) and didn’t go for the more joint venture the developer suggested. He’s comfortable(ish) with that decision and now has to deal with the fallout from that. Glad you’ve popped your heads up and offered opinions. Thanks.
Thanks for the address, which I won't mention but I will respond here so others know what I have said. The rateable value is £19,0000 which should give a bill in the region of £9,500pa, so I am slightly puzzled where the £25,000 comes from.
I was wondering whether one could use a loop hole that empty rates only applies to buildings, and if the land was valued it might be possible to argue that it was predominately land however in reality the land makes up about 10% of the value, with glasshouses and a covered area forming the reminder. I do wonder if a glasshouse is a building but I suspect it is.
I cant remember if planning consent has already been grated or not, if not you could ask the developer if parts of the building could be demolished to help reduce the assessment?
I was wondering whether one could use a loop hole that empty rates only applies to buildings, and if the land was valued it might be possible to argue that it was predominately land however in reality the land makes up about 10% of the value, with glasshouses and a covered area forming the reminder. I do wonder if a glasshouse is a building but I suspect it is.
I cant remember if planning consent has already been grated or not, if not you could ask the developer if parts of the building could be demolished to help reduce the assessment?
Thanks Chris, I’ve replied via email. No planning approval yet, the developer is rethinking some aspects. I expect demolition of the greenhouses, storage sheds and outdoor sales areas needs to be prioritised to try and offload this burden. I must have misunderstood the rateable value and what is actually being paid. Thanks for your advice.
I will absolutely defer to the experts on the forum here - but will answer as I run a business that is currently going through the process with, to be fair, a very helpful "man from the Council"
I've done hardship applications before so 'know the form' (I work with financially distressed businesses) - what has been made extremely clear in this application is that they are trying to do something as the company is unique and educational (and employs about 200 from the local economy and all the other normal matters that are considered).
We've been told categorically that the business has to be unique and the relief is not available if it gives a company a competitive advantage (appreciate not your case as the business is closed) or if the business just can't afford it (more relevant).
As a result I would have thought you'd have more success following the route of 'devaluing' the rateable value in the first place if you see what I mean, which I know is the route others have already suggested.
Hope this helps, just trying to give a supporting viewpoint
I've done hardship applications before so 'know the form' (I work with financially distressed businesses) - what has been made extremely clear in this application is that they are trying to do something as the company is unique and educational (and employs about 200 from the local economy and all the other normal matters that are considered).
We've been told categorically that the business has to be unique and the relief is not available if it gives a company a competitive advantage (appreciate not your case as the business is closed) or if the business just can't afford it (more relevant).
As a result I would have thought you'd have more success following the route of 'devaluing' the rateable value in the first place if you see what I mean, which I know is the route others have already suggested.
Hope this helps, just trying to give a supporting viewpoint
Was the business Limited?
If so, has the business been wound up?
Did the business or your father own the asset (i.e. land and building)? If it was your father was the business paying him rental?
Did the developer pay your father or the business?
Just doesn't seem to add up and if he simply shut the gates he could potentially have a good few more issues than simply rate relief. Not an accountant btw.
If so, has the business been wound up?
Did the business or your father own the asset (i.e. land and building)? If it was your father was the business paying him rental?
Did the developer pay your father or the business?
Just doesn't seem to add up and if he simply shut the gates he could potentially have a good few more issues than simply rate relief. Not an accountant btw.
hunton69 said:
Contact a charity they register the address as one of there sites they pay no rates and your father pays them 30% of the rates bill.
Thought many knew this sort of scam
And woe betide any charity trustee who gets involved in this scam and caught. The occupation threshold for charities is much higher than a standard business and some of the charities involved in this scam have been wound up and businesses received back dated bills.Thought many knew this sort of scam
A charity has to "wholly or mainly" occupy a premises so at least 50% of the space needs to be occupied. A standard business only needs to occupy part of a premises, and in the lead case on the subject the business occupied 0.2% of the property and was held to be in occupation!
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