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Charity move can cut property bills for dealers

Dealers could avoid paying business rates on any empty properties they have if they let a charity or non-profit organisation use the building while looking for a buyer.

Charities and registered community amateur sports clubs are entitled to 80% rate relief on any non-domestic property that is used wholly or mainly for charitable or sporting purposes. 

A discretionary 20% ‘top-up’ relief is also available for local (not national) organisations. Discretionary relief of up to 100% is also available to non-profit making organisations.

Tim Brown, senior surveyor at Ruddle Merz, said: “A dealer with an empty site could co-occupy with a charity. It wouldn’t matter if it was a short or long-term lease. While that legal agreement was in place, the dealer would be able to defer a large, if not entire proportion of the business rates.

“The tenancy could be rent free or there could be a fee attached, it would be up to the dealer, but the significant savings being made by not having to pay business rates could present a situation where the premises could be provided rent free.”

Brown said the practice was perfectly legal and was exercising what’s already within the ratings law. 

He added: “It doesn’t really matter what the charity uses the premises for during the lease, whether it’s a retail outlet or just for storage – that won’t affect the way the rates are calculated.

“There are cases where leasing to a charity to avoid the rates are happening, but I would say the amount of empty properties on offer outweigh the number of charities that need them, but it’s a possible option for dealers to save money.”

A petition has been launched on the No 10 website to campaign against empty business rates. The petition, launched by David Flood, managing director of Rateable Value, has been set up to ask the Government to extend the void period before an owner has to pay empty rates to 12 months. 

The petition states: “The Government should help all types of property owners across the sector especially, in view of the deepening recession, by extending the length of the empty rates void period to 12 months.”

It is open until December and dealers can sign it by searching for ‘empty business rates’ on http://petitions.number10.gov.uk.

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