Business Rates on Empty property

fdp786

Hi everyone. I really need some help. I set up a limited company over a year ago in the hope of setting up a cafe/bar/restaurant which was always a dream of mine. Short story - found a property, signed lease on 5/2/2020 and got a 6 month rent free period with landlord. Landlord seems fair and Im dealing with the rent side of things with him because I am clearly not going to open this year. Hoping to open from February 2020.

However, got a £22,000 bill from the council for 1/4/2020 - 1/4/2021 for business rates because the property is empty. Also another bill for £3412 for the period 5/2/2020-1/4/2020.

I called them up and they said these are the rules. They said that the property had been vacant since July 2019 and there would have been a 3 month business rates exemption given but the landlord had been paying it since. I don't get any exemption, I have to pay it from the moment I take it over. I had no idea about this and didn't budget for it at all. I explained to the council that while I was aware of the concept of Business Rates, I thought because I was a medium sized business, I was exempt. They said I am once I have commenced trading. But while the building is empty, Its my responsibility. How counterintuitive. And incredibly stressful. 

There are no coronavirus exemptions either, they just allow you to spread the cost. Whats worst, is that they have just informed me so they are asking for £3700 a month until I start trading in order to pay for the shortfall from February. I explained how ludicrous this was and was met with stock responses. They have asked for a minimum of £2000 a month.

Can anyone help? I looked things up on the on here https://www.gov.uk/apply-for-business-rate-relief/exempted-buildings-and-empty-buildings-relief and they're well within their rights to be asking for it. 

Gutted. Please help. 

Thanking you knowledgeable folks in advance. 

FP

Jeremy535897

There are other threads on here raising the same issue, and there is no solution to it.

Grumpy_chap

Hopefully someone on here can give advice about Small Business Rate Relief.  I do understand, however, that there will not be any Covid relief because the business was not trading before.

Jeremy535897

Grumpy_chap said:

Hopefully someone on here can give advice about Small Business Rate Relief.  I do understand, however, that there will not be any Covid relief because the business was not trading before.

The numbers are far too big for SBRR.

Grumpy_chap

Thanks Jeremy, though surely not what the OP wanted to hear.

LeicesterWorker

Write to your MP and local news and hope for the best.
Good luck to you, there are lots of injustice in the Corona Schemes and you appear to be one of them.
I know it's hard to consider bankruptcy, but it could be the best way to get out.

lincroft1710

LeicesterWorker said:

Write to your MP and local news and hope for the best.

As the council are acting within the law and could be criticised by their auditors for not collecting money which they should collect, local MP and press are unlikely to persuade the council to waive the charge 

Jonesy1977

Small Business Rate Relief would have to be a rate-able value under £12K, and it wont be reviewed for around another 4 or 5 years so I don't think this will be an option.  I cant really see a way out of this if you have signed the lease.  I don't wish to sound like i'm lecturing (its a genuine question) but did you not factor rates into the business plan?  If you did and you have a bank account and you set the business in advance of March (allbeit not trading) I wonder if there may be an option for BBLS?  still debt but long period to repay potentially and backed at 100%. 

Jeremy535897

You have to pass the trading test for BBL at 1 March 2020:
"The business is engaged in trading or commercial activity in the UK at the date of the application, was carrying on business on 1 March 2020 and has been adversely affected by coronavirus (COVID-19)."

For when a trade starts:

"The classic definitions of trade in the House of Lords judgements in Ransom v Higgs [1974] 50TC1 stress the active nature of trading - the need to be providing goods or services, to be trading with someone.

The courts have distinguished between preparing to commence business and actually commencing business. As a general rule a trade cannot commence until the trader:

• is in a position to provide those goods or services which it is, or will be, his or her trade to provide, and
• does so, or offers to do so, by way of trade."

Rates may be pre-trading expenditure allowable for tax when the trade starts, but being obliged to pay them does not of itself make the ratepayer trading.

SBRR tapers off up to RV of £15,000 but on OP's figures the RV is over £45,000.

Jonesy1977

@Jeremy535897 are the trading rules the same for CBILS? Just thinking about the OPs bank and how they may support if the business plan was reviewed before giving an account, perhaps they could use CBILS to help “refinance” the rates for first year of trading rather than kill the business before it starts or maybe offer a conventional loan over a term.   OP none of these options are palatable but the only alternative would be to fold the business I think.  

Jeremy535897

CBILs are for more than £50,000 and are not generally suitable for start-ups. Normally they want to see 3 years of trading. From British Business Bank:

"Is the scheme appropriate for start-ups?

Potentially, if your business activity is primarily UK-based. For early-stage businesses in their first two years of trading, the British Business Bank’s Start Up Loans programme (loans from £500 to £25,000 at interest of 6% per annum) may be more suitable.

Visit www.startuploans.co.uk for more information."