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Car retail coronavirus business rates exemption ‘requires urgent clarification’

Chancellor Rishi Sunak

Car showrooms have been included in the list of businesses which will be exempt from business rates during 2020/21 – regardless of their taxable value.

But clarification is being demanded from Government to ensure that modern car dealerships – which include aftersales and parts sales operations – also receive the relief, despite the mixed-use nature of their operations.

In HMRC documents published following yesterday’s announcement of Government fiscal measures to support businesses across the UK in light of the COVID-19 coronavirus outbreak “car showrooms” were listed alongside shops and restaurants and other retail locations now eligible for the relief.

The new measures expanded on Government’s initial offer of a 12-month exemption for occupied retail properties with a rateable value of less than £51,000 in the 2020 Budget by extending the relief to all properties in the retail, hospitality and leisure sectors irrespective of their rateable value.

Guidence issued by RSM advised car retailers that they “need to apply to their local authority to obtain the discount and guidance”, however, and local authorities may still knock-back claims from businesses deemed to be of multiple use.

Robert Stephens, from Accendia Consulting, called on car retailers and their manufacturer partners to come together to demand "urgent clarification".

He said: “Our advice is not to pay business rates on April 1 in anticipation of car dealerships inclusion in the measures, across their range of functions, but the sector really needs to come together with one voice to ensure that is the case. 

“At the moment car showrooms are exempt, but I’d fully expect certain local authorities, which currently have discretion on this, to push back in circumstances where a building is deemed to be of a hybrid business use.”

Many property firms and consultants are now seeking clarification is now being sought to determine the exact definition of a “car showroom” under the new scheme and to what extent the dual-purposes of aftersales and parts sales operations may complicate potential claims.

Paul Nash, director of business rates at property consultant Lambert Smith Hampton (LSH), said that businesses outside the definition of those which qualify for a business rates exemption may still have recourse under certain circumstances.

He said: “For those properties that do not benefit from the exemption, the impact of the coronavirus outbreak itself may constitute grounds for appealing a property’s rateable value on the basis of a Material Change in Circumstance, although the Valuation Office Agency has suggested it would resist such appeals.

Additionally, properties which are mothballed or partially vacated could also qualify for empty rates relief of up to six months depending on property type, LSH added.

Nash added: “These are incredibly worrying times for business owners who are already struggling from a myriad of macro-economic issues.

“We strongly recommend seeking professional advice from a qualified rating surveyor as there may well be opportunities to minimise your business rates liabilities in the short to medium-term, which will hopefully alleviate some of the financial pressure.”

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