Insight

Local Authorities refusing business rate relief to office-based companies

Many Local Authorities are refusing business rates relief to office-based companies whose staff are – following Government instructions – working remotely during the Covid-19 lockdown. Those businesses do not qualify for the Expanded Retail Relief schemes put in place by Government to assist businesses with fixed costs.

Working from home became the norm for millions when PM Boris Johnson announced in late March that people should not go into work unless they were key workers or if work could be completed at home. Offices were deserted almost overnight on those instructions. The regulations allow discretionary relief to be applied by Local Authorities but many are refusing to exercise that relief. The regulations also stipulate that if property is incapable of occupation due to action taken by the Crown ratepayers become exempt from business rates and Local Authorities are also trying to resist that regulation.

Westminster City Council, for example, has been telling companies that empty rates relief was “not applicable due to Covid-19” but advised them to look for help from the specific hardship relief funds. Office properties in Westminster have a cumulative rateable value £1.56bn. The rates’ bill for the three-month period of lockdown equates to £195m. The Council advised businesses to pay as much as possible but did add that its recovery action was “temporarily on hold”. The move has caused confusion in some sectors.

Many authorities warn they are “running on empty” and are on the brink of bankruptcy. The temporary hold on recovery action comes to and end this month so expect litigation to ensue as business fights to stay solvent.

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