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Pitmans LLP

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Supreme Court ruling will lead to increase in business rates

May 2016

Many businesses will be liable for increased business rates following last year’s Supreme Court ruling in Woolway (Valuation Officer) v Mazars LLP.

The Court held that where tenants occupy multiple floors in a building but need to use communal areas to move between floors, each floor is considered to be a hereditament which is must be individually assessed for business rates. The same assessment will be made where separate parts of a building could be leased individually, without material detriment to the use of each unit. Landlords would usually offer a discount in rent to reflect the total space and similarly there would be a discount allowed in the calculation of business rates.

Many current rating appeals will have to be affected by the new rules. The consequences have been compounded by the chancellor’s decision to limit the time period for which appeals to the Valuation Office Agency (“VOA”) may be made to 1 April 2015. Prior to this, claims could be made dating back as far as 2010, as the last valuation date provided by the VOA.

Initially, the VOA required any appeals that were based on the system prior to Mazars to be withdrawn and resubmitted which meant that the period for which a reduction and rebate might be obtained would be significantly reduced for some claims. Fortunately for many, the VOA has amended its stance in relation to appeals which had already been submitted prior to the decision to limit claims. Such appeals will not require resubmission and are therefore not affected by the capped time period. New appeals, however, will be capped and are also impacted by Mazars, the decisions combining to make potentially significant increases to business rates.

Should you require any further information, please do not hesitate to contact Sally Sharp.

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