Charities can claim mandatory 80% relief from non-domestic rates (commonly called "business rates") if their property is used "wholly or mainly" for charitable purposes, with local councils able to grant up to 20% extra discretionary relief. This has been a significant factor in the growth of charity shops on UK high streets.
Recently, the Court of Appeal in R (on the application of Emeraldshaw Ltd) v Sheffield Magistrates’ Court confirmed that short “tenancies at will” granted to a charity during redevelopment did not shift liability for business rates and, on the facts, liability for business rates remained with the landlord so that no relief was available. The Court focused on who had the immediate legal right to actual physical possession in practice.
Key points
- Tenancies at will are commonly used in the context of business rates mitigation schemes and if used correctly, can still be the case.
- Tenancies at will used as business rates mitigation will not always transfer business rates liability to the occupier if the occupier lacks a real or practical ability to take and use possession of the property.
- Extensive landlord rights of entry and, as in this case, concurrent redevelopment can undermine claims that a charity is the “owner” for rating purposes.
- Evidence of genuine charitable occupation and control is critical.
- The courts will prioritise practical reality over form and will disregard arrangements aimed at avoiding business rates.
How we can help
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