In a fast-moving situation, it’s important to understand the implications of the Government’s latest measures on your business. Here we outline the impact of what was announced since our last update, but if you have any specific questions about your rates liabilities then please do not hesitate to get in touch with the Gerald Eve team.
Retail, leisure and hospitality
Friday saw the Prime Minister order the temporary closure of a range of leisure and hospitality business as part of social distancing measures. This was followed over the weekend by the publication of the regulations enforcing this ban, which passed Parliament ‘on the nod’ today.
To summarise, the properties affected are:
1. Restaurants, including in members’ clubs
2. Cafes and work canteens, except those in hospitals, care homes, schools, prison and military facilities, or those serving the homeless
3. Bars, including in members’ clubs
4. Public houses
5. Cinemas
6. Theatres
7. Nightclubs
8. Bingo halls
9. Concert halls
10. Museums and galleries
11. Casinos
12. Betting shops
13. Spas
14. Massage parlours
15. Indoor skating rinks
16. Indoor fitness studios, gyms, swimming pools or other indoor leisure centres
Under rating legislation, any property in the above category becomes exempt from paying empty rates, and as such we recommend that businesses with such properties should advise their respective local authorities that empty rate relief applies from 21st March 2020. The majority of these properties will benefit from the rates holiday announced previously, which comes into effect on April 1st 2020.
Properties that remain partly open as takeaways only are likely to be treated as ‘occupied’ with full rates payable until 1st April, when the 100% relief kicks in.
The measures which require properties in the categories referred to above to close apply across the UK and we will report further on the legislative position in the devolved authorities in our next update.
EU State Aid clarification
We have previously identified the uncertainty over the application of EU State Aid rules to the rates relief measures announced by the Government. In their original form, the rules restrict companies to no more than €200,000 over a three-year period; a subsequent general update from the EU stated this limit would be raised to €800,000. Given the size of rates bills, particularly for retail, leisure and hospitality chains, this would severely restrict the relief firms could receive.
On Friday we sought clarification from HM Treasury and received the following statement concerning the Government’s intention to ignore the EU’s apparent restriction on how much relief each business can receive:
“With regards the State aid point, the Government welcomes the Commission’s flexibility, but believes there is a case for a specific, temporary and targeted business rates intervention, given the particularly acute impact Covid-19 and the associated public health measures have had on the retail, hospitality, leisure and nursery industries.
“The Government initiated discussions with the Commission on the business rates intervention prior to the Chancellor’s announcement on Tuesday. We have since provided a formal notification of the measure to them and do not intend for the 800,000 EUR limit to apply to the extended retail discount.’
On this basis we believe that Local Authorities should follow the Government Guidance and apply the relief without the need for further clarifications or declarations by businesses.
Rates relief for other sectors
As social distancing measures are ramped up it is clear that there are many sectors outside of retail, leisure and hospitality which are being adversely affected by Covid-19. Some of these are already actively lobbying to be added to the categories receiving 100% relief. We strongly believe that rather than each sub-sector having to make its case individually, the Government should waive rates for all businesses for the forthcoming rate year. There is surely hardly any businesses which will not be affected by these exceptional circumstances.
Here is the call that we issued last week and we would invite you to support this call by sharing the message over social media using the buttons below.
Deferral of rates payments
For those properties which are being impacted by the pandemic but for which a rates liability remains, it is possible to approach local councils asking for a revised payment plan and we are aware of a number of authorities proactively offering this. The terms of the payment plan would be for individual agreement, but we believe there is a fair prospect of councils agreeing to defer some or all of the usual monthly instalments for some months, with the shortfall to be made up by way of increased payments subsequently. We consider that the prospects of reaching an agreed position with councils is improved if one offers to discharge the full year’s liability by the end of March 2021, but it may be possible to agree a longer payback period.
