Business Rates Mitigation: A Cautionary Tale

In this blog our specialist Rates Mitigation team would like to highlight a recent occurrence that we think vacant property owners across the nation, particularly those wanting to reduce or mitigate their Business Rates, should hear about. 

The UK Supreme Court has just ruled on a landmark case involving two property developers, regarding unpaid Business Rates on unoccupied properties. It has been decided that the two local authorities involved, Rossendale and Wigan, can sue the two companies. As a result, we now need to ask ourselves what went wrong with these companies, to avoid any commercial landlords getting involved in similar schemes. 

The two property development companies worked by using special purpose vehicle companies (SPVs) to take out leases on empty properties and therefore become liable for the tax. However, the SPVs were dissolved or put into liquidation meaning no taxes had to be paid. 

 

When handing down the ruling Lord Michael Briggs stated: ‘The whole purpose of the schemes was to avoid payment of the empty rate, rather than to transfer the responsibility for its payment. Apart from rates avoidance, the schemes had no separate business purpose of any kind.’ 

 

Essentially, the whole purpose of the companies was to go into liquidation and avoid any business rates. When joining a rates mitigation scheme it would be wise to avoid any companies that use schemes like this, whilst we wait for the outcome of the trial. 

 

Unlike the above schemes, FCS transfer the liability for all the rates and relief for the full period. We have a use for the empty properties and have a 0% rejection rate from any local authority. FCS are proud to offer this unique service, removing landlord liability in a safe, transparent and legal manner. 

Do you have a vacant commercial property which you’re liable for? Get in touch and let FCS take the pressure off. 

 

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