Business Rates Question

panman52

Hi there,
I have decided to make an offer on a property in London; however, the offer depends on finding the resolution to a business rates question I have.

The unit is advertised as one unit. However, it is effectively two units that have been merged together recently. There is a dividing wall down the middle of both units, with a large opening in the wall where you can walk from one unit to the other. The unit is 5 & 7 xxx Court.

The reason this is relevant is that for the purposes of business rates, the unit is split into two different units. One has a rateable value of £7100, and the other has a rateable value of £7700.

As a new business I would look to attract small business rates relief. When you add the rateable values together it makes £14,800. This would not yield any significant rate relief, and the business rates would be over £7000. However, if you split the properties into two different units, and claim rate relief on both individually, the small business rate relief is significant, and the business rates would drop down to around £1500.

To attract this rate relief, I would like to make an offer with two separate companies, with different names on the leases. I would be prepared to do this, and create two entirely separate companies, both with myself as the company Director; despite the fact that both companies would effectively be offering the same service and the office(s) would be used for the same thing. My question therefore, is if I do this, and take out a lease on both properties with separate companies, am I in some way breaking the business rate rules? In effect, I would be taking on liability with two separate company entities, so I don’t see why I would be. However, it is not clear to me.

Any help would be hugely appreciated.

Thanks,

hunnie

Hi
I believe you can only get rate relief on one business premises.
So you could merge the two properties for rates purposes or have separate people renting each unit.


regards
Hunnie

Savvy_Sue

Not an expert, but I know that if you set up two separate companies for the specific purpose of keeping your turnover under the VAT registration limit, they will see this as evasion (the dodgy one) rather than avoidance. I'd expect the same to happen with biz rates as well, but as I said, not an expert.

lincroft1710

In Rating Law it doesn't matter how many "companies" you form, or if you block up the access between the 2 units, it will be seen as a single contiguous unit with you as the occupier as you will be the sole director of these companies. The 2 units should be merged to give a single rateable value.

There is also significant case law on this subject.