The government ended 2017 on a positive note where small business property tax is concerned. If you haven’t yet heard, one of the things they did was begin the process for rolling back the burdensome ‘staircase tax’ that has been crippling small businesses occupying multiple floors in a single building. A number of court decisions have the government working on other tax changes as well.
Commercial property tax consultants are thrilled about the government’s actions, as are their clients. I’ve seen it myself in my role as commercial property adviser. When clients know that their tax liabilities are being reduced, they are more likely to look at relocation and expansion.
The Staircase Tax Situation
Under the staircase tax rules, companies occupying “more than one adjoining floor but which use a communal staircase between floors have been taxed as if they occupied separate properties,” the Telegraph reported in a 29th December piece written by Rhiannon Bury. The unusual rule barred such businesses from accessing the same kind of rate relief available to business owners occupying a single storey property.
Under the law, the stairwell tax recognised adjoining floors with a communal staircase as separate properties needing to be taxed separately. A Supreme Court ruling in August 2017 made matters worse by subjecting companies that had not previously paid the higher rates to stifling tax bills that put some businesses in jeopardy.
Communities Secretary Sajid Javid announced in late December that draft legislation has been introduced to solve the problem. He called the stairwell tax “unfair” and one that meant tax hikes for small businesses. Completion of the new legislation should eliminate it.
Progress on Other Fronts
In addition to the elimination of the stairwell tax, the Telegraph reported on progress being observed on other fronts. For example, a number of judges have let it be known they are unhappy with the Valuation Tribunal for England (VTE) due to their tendency to strike down rate appeals on technical issues. One of the cases cited involved a property firm that did its own research to demonstrate how often rate appeals are dismissed.
The judges hearing the case criticised the Valuation Office Agency (VOA) for moving to a new appeal system that made appealing rates even more complicated. The judges cited the fact that the VTE and VOA don’t even follow their own rules for taxpayer rate appeals. They ruled that the two agencies must review their procedures in order to guarantee all rules are followed. The judges further ruled that a non-discriminatory approach to rate appeals must be practised at all times.
Commercial property tax consultants, including me, are more than pleased to see action being taken to correct some of the systemic problems in our tax system. The more they do to clean it up, the less small businesses will be hindered by arcane tax policies and unevenly applied rules. Cleaning up the system will also make my job as a commercial property advisor a lot easier.
Sources:
Telegraph – https://www.telegraph.co.uk/business/2017/12/29/government-begins-reversal-staircase-tax/
By John Parkinson.
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