Early Christmas present for ratepayers who lost out to the 'Staircase Tax'

Written By:

Keith Cooney, Knight Frank

13 Dec 2018

2 minutes to read

Categories:

This follows on from the recently passed Act (2) and comes into force on the 17th December. To a large extent, this reverses the losses incurred following the Supreme Court’s decision in Woolway VO v Mazars 2015 to redefine what constitutes a taxable unit of property.

Prior to the decision, the practice was to combine all the ratepayers occupied areas in a building into a single taxable unit of assessment provided they were contiguous [vertically / horizontally touching].

After the decision all these separate areas had to be split up into individual taxable assessments. The only exception was where the Ratepayer had their own exclusive access between the parts which was very rare.

The consequences of this decision were such that thousands of business lost their small business rates relief exemptions overnight. As the splits were done retrospectively it also meant they were faced with crippling backdated charges which many were simply unable to pay.

For those that weren’t bankrupted they can now apply to have their taxable assessments reversed into one and reclaim their relief.

The other parties affected by this are the Local Authority who will now have to issue these refunds at a time when their budgets are under extreme pressure from the Government cuts in grant. It is hoped that the Government will step in to fund these unforeseen costs.

A further potential problem is, before the Mazars case, the legislation defining a taxable unit of property [hereditament] was loosely drawn and was mainly defined through 400 years of case law.

However, the legislation has entered new uncharted waters by seeking to replace this with a far more complex drawn out definition. At this stage, it is too early to know if this will have unintended consequences.

Finally, ratepayers should be aware that in the majority of cases, the deadline to lodge a proposal to reverse this tax is the 1st January 2020.

Practitioners should note the legislation also includes new amendments to the Check Stage of the CCA where properties are split or merged.

For more information please click on the links or contact Knight Frank's Business Rates Team.