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13 November 2018 | Comment |

Beneficial Occupation and Liability for Business Rates

The Local Government Finance Act 1988 provides that business rates are payable whether or not a building is actually occupied, but where a property cannot be fully “beneficially occupied”, rates will be reduced or the building may even be removed from the rating list (depending upon whether only part of the building can be used, or none at all).

A case before the Upper Tribunal (Lands Chamber) last week considered what this means. The tenant of the building was a company who specialised in converting mixed waste plastic products for the construction industry. For this, a high voltage electricity supply was needed. The supply at the property had been cut and cables taken.

At the commencement of the lease, the tenant therefore had to carry out substantial work before it could occupy the building. It was doing the work in three phases and therefore argued that the rates should initially be nil, and then increased in phases in accordance with the work done.

The Tribunal did not agree. The building was capable of occupation, and could have been occupied from the outset by any other tenant. The specialist nature of a particular tenant’s needs were not therefore relevant to the question whether the building is capable of “beneficial occupation”.

Hence rates may be payable even where substantial works are being carried out. The nature of the particular occupier is not relevant. The question will be whether other occupants without those requirements could have moved in.

R3 Products Ltd v Salt, [2014] UKUT 0333 (3rd Sept 2014)

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