How to minimise the impact of astronomical business rates

Here are tips from Paul Giness, a property consultant with Expense Reduction Analysts: 1. Review the letter and ensure there are not any obvious errors. For example, a warehouse on part of the site on which you are located may have been demolished or you may not occupy the whole space as stated in the letter, upon which the rateable value has been calculated. You will have an opportunity to put things right if you act fast – date to alert the VOA to any errors is November 30, 2009 so they can reassess the rateable value. If you do not respond by this date you will end up going through an appeal process, which can be more time consuming.

2. If you are unsure whether the new rateable value is correct, look at getting a review by an expert who will analyse your rent, the prevailing market conditions during 2008 and advise if the hypothetical rental value attached to the property more than a year ago was accurate. The appeal window opens on April 1, 2010 for proposals. In Scotland, appeals will have to be lodged by the end of September 2010.

3. If you have not yet appealed your 2005 assessment or there has been some physical change to your site since you last appealed, it could be worth trying to get a backdated saving. However an appeal must be lodged before March 31, 2010.

If the rateable value appears correct, then there are a number of ways to offset the costs of a subsequent rise in business rates from 2010:

1. Look at increasing space utilisation, sub-letting any space saved or claiming empty rates relief on the space not used. However, remember that empty rates relief changed in 2008. Effectively there is now less relief available than before as the government wants to encourage landlords and occupiers to bring empty property back into use. This means that most property that has been empty for more than three months – or in the case of industrial property, for more than six months – will no longer receive relief from rates. In the majority of cases empty property beyond these relief periods will be responsible for 100 per cent of the basic occupied business rate, although there can still be opportunities that could be worth discussing with an expert.

2. Renegotiate the lease by exchanging something that is of benefit to the landlord, such as dropping a break clause to get out of the lease early, in return for a lower rent or a rent-free period.

3. If your lease is coming up for renewal, consider moving to offices of comparable size within an area of lower rent and rates. You can compare your rating valuation to that of other properties in your area or to properties of a similar type at www.voa.gov.uk

4. Alternatively, simply reduce the space you occupy if this is feasible and the landlord is agreeable – remember it’s a buyer’s market in commercial property at the moment.

5. If you are a small company and do not currently benefit from small business rate relief, you may gain extra rate relief by moving to smaller premises. From April 2010, when the new rating revaluation comes into force, you can claim a sliding scale of small business rate relief below the rateable value threshold of £18,000 (£25,500 in London). Small business occupiers should also be aware that this threshold has just risen by £3,000 so, if your new rateable value from April 2010 takes you beyond the previous threshold of £15,000, you will still be able to claim relief, assuming that it is no more than £18,000. You can check the Business Link website for full eligibility details.

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