COVID – 19

Business Rates liability for properties that have closed due to Coronavirus

If occupation of a property is prohibited in law, under rating legislation properties in this category are exempt from paying empty rates. For property uses that are specifically named in Government guidance as those which must close there is a clear argument that the exemption should apply for as long as the closure order remains. The exemption should commence from the date that the Government issued its edict requiring closure.  We suggest emailing your local council to stress that you are prohibited by law from trading and to request nil liability from that date.

An important distinction is in Northern Ireland and Scotland where the same closure measures are in place but both are awaiting the enactment of the Coronavirus Bill before issuing their own specific regulations.

The matter is less clear cut in relation to properties no longer in use but which are not specifically named, such as offices. As the government continues to direct that we remain at home, avoid unnecessary contact and public transport and maintain social distancing when outside, more businesses have been forced into closing their properties. We believe that there is now a compelling argument to say that these properties have effectively been closed as a result of government orders and should therefore be treated in the same way as property where occupation is legally prohibited.

We would therefore advise that where businesses have properties that are closed for these reasons 100% empty rate relief should be sought , referring specifically to the regulations which provide for no empty rates where one is ‘prohibited by law from occupying it or allowing it to be occupied’ (Regulation 2008 SI 386 for England and Regulation 2008 SI 2499 (W.217) for properties in Wales ).

The Prime Minister has ordered the temporary closure of a range of  leisure and hospitality businesses as part of social distancing measures.

To summarise, the properties affected are:

  1. Restaurants, including in members’ clubs
  2. Cafes and work canteens, except those in hospitals, care homes, schools, prison and military facilities, or those serving the homeless
  3. Bars, including in members’ clubs
  4. Public houses
  5. Cinemas
  6. Theatres
  7. Nightclubs
  8. Bingo halls
  9. Concert halls
  10. Museums and galleries
  11. Casinos
  12. Betting shops
  13. Spas
  14. Massage parlours
  15. Indoor skating rinks
  16. Indoor fitness studios, gyms, swimming pools or other indoor leisure centres

Under rating legislation, any property in the above category becomes exempt from paying empty rates, and as such we recommend that businesses with such properties should advise their respective local authorities that empty rate relief applies from 21st March 2020. The majority of these properties will benefit from the rates holiday announced previously, which comes into effect on April 1st 2020.

Properties that remain partly open as takeaways only are likely to be treated as ‘occupied’ with full rates payable until 1st April, when the 100% relief kicks in.

Further information can be found on the Government Website here

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