In our update on Monday 23rd March we considered the impact of the Prime Minister’s announcement to order the temporary closure of a range of leisure and hospitality businesses and the subsequent regulations enforcing the ban. As more property uses have been added to the list of required closures the Government has widened the scope of the retail, leisure and hospitality relief scheme for 2020/21 to include all properties that are directly subject to the order to close.
Despite lobbying from other sectors the Government has still yet to announce any business rate relief measures for those properties that do not qualify as retail, leisure or hospitality.
In a surprising move the Chancellor has advised the airline and airport sectors that there will be no additional help which had previously been trailed.
Guidance has also been issued to Local Authorities regarding the cash grants available to businesses based on rateable value criteria.
Retail, Leisure and Hospitality
New guidance to Local Authorities regarding the expanded retail discount for 2020-21 was issued yesterday and can be found here.
This lists the properties that will now benefit from 100% rate relief during 2020/21 and includes those that have been required to close as part of the most recent government requirements.
EU State Aid Clarification
The lack of clarity over whether EU State Aid limits apply to this relief is hugely disappointing. Notwithstanding HM Treasury’s statement that it intends the expanded retail relief scheme to be operated outside EU rules, the latest guidance from the Communities and Local Government Department states:
‘The Government has notified the EU of its intention to bring forward an immediate change to the UK’s tax treatment of non-domestic property, in response to the ongoing Covid-19 emergency, and to seek clearance under Article 107(3)(b) of the Treaty on the Functioning of the European Union. Subject to this approval, the Expanded Retail Discount scheme will become a notified State aid. Authorities should prepare to award the discount ignoring de minimis limits and MHCLG will inform them of the outcome of the notification as soon as it is known.’
We will continue to engage with government and advise as soon as confirmation is given.
Wales
The Welsh government has issued guidance regarding relief to the retail, leisure and hospitality sectors including this statement.
This confirms the intention to mirror the expanded retail relief scheme adopted in England but with an exclusion of properties with an assessment of RV £500,000 or more which appears to penalise larger businesses operating in this sector, particularly hotels.
Further guidance on this is promised.
Scotland
We referred in our previous update to the similar measures introduced in Scotland.
The Scottish Government has indicated that they consider that this relief will come within the EU State Aid limits but have yet to confirm and during this period of uncertainty we have been lodging material change of circumstance appeals for our clients’ properties in the affected sectors.
Northern Ireland
Details of the separate package of relief in Northern Ireland were included in our previous update.
Liability for properties that have closed due to Coronavirus
We referred in our last update to the position regarding properties where occupation is prohibited in law. Under rating legislation properties in this category are exempt from paying empty rates. For property uses that are specifically named in Government guidance as those which must close there is a clear argument that the exemption should apply for as long as the closure order remains. The exemption should commence from the date that the Government issued its edict requiring closure.
The matter is less clear cut in relation to properties no longer in use but which are not specifically named. As the government continues to direct that we remain at home, avoid unnecessary contact and public transport and maintain social distancing when outside, more businesses have been forced into closing their properties. We believe that there is now a compelling argument to say that these properties have effectively been closed as a result of government orders and should therefore be treated in the same way as property where occupation is legally prohibited. We would therefore advise that where businesses have properties that are closed for these reasons 100% empty rate relief should be sought , referring specifically to the regulations which provide for no empty rates where one is ‘prohibited by law from occupying it or allowing it to be occupied’ (Regulation 2008 SI 386 for England and Regulation 2008 SI 2499 (W.217) for properties in Wales ).
This is the action that we are taking on behalf of clients for whom we provide rate payment services.
We are continuing to apply pressure on government to give Local Authorities clear directions to this effect and if more pressure is applied by businesses making this argument it may help in reaching this conclusion.
In Scotland and Northern Ireland the same closure measures are in place but both are awaiting the enactment of the Coronavirus Bill before issuing their own specific regulations.
Other business support
The Government is putting into place a range of business support measures outside of business rate relief, some of which use rateable values as part of the eligibility criteria. We suggest you bookmark this page relating to support in England as it is regularly updated. The devolved countries are developing their own business support schemes.
The latest detailed guidance in relation to grants available in England is here.
This identifies the following main cash grants that may be available. They are to be administered by local authorities and the guidance indicates that the sums available are limited under EU State Aid rules to €800,000 per company.
‘Under the Small Business Grant Fund (SBGF) all businesses in England in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000 in line with the eligibility criteria as set out in paragraphs 15-21.
Under the Retail, Hospitality and Leisure Grant (RHLG) businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of less than £51,000 will be eligible for the following cash grants per property.
Eligible businesses in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000, in line with the eligibility criteria as set out in paragraphs 22-27.
Eligible businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000, in line with the eligibility criteria as set out in paragraphs 22-27.
Businesses with a rateable value of £51,000 or over are not eligible for this scheme. Businesses which are not ratepayers in the business rates system are not included in this scheme.’
