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Ash
Ash, Solicitor
Category: Law
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Experience:  Solicitor with 5+ years experience
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Commercial subletting, small business rates relief

Resolved Question:

commercial subletting, small business rates relief
Submitted: 9 months ago.
Category: Law
Expert:  Ash replied 9 months ago.
Hello my name is ***** ***** I will help you.Could you please explain your situation a little more?Alex
Customer: replied 9 months ago.
I have a a company that has commercial lease on 1000 sq ft of space (4 separate offices with WC and kitchen shared between all offices) which allows sub-letting and licensing. Our business involves providing office space to small companies so our business does not actually use the space ourselves. At the moment we are licensing space and pay all the business rates ourselves. I want to minimise business rates but do not qualify for small business rates relief. Would it be possible to create sublets - one on each office - and have the 4 individual companies using the offices use their own small business rates relief?
Expert:  Ash replied 9 months ago.
Are they each self contained?
Customer: replied 9 months ago.
Each office is self contained in this instance (about 200 sq ft each, so 4 x 200sq ft offices). Each office has a door and a coded lock. There is a communal entrance hallway and communal kitchen, bathroom and garden.The landlord has not included the square footage of the garden in my lease and I guess it's also not included in business rates. The square footage for the bathroom and kitchen add up to approx 200sq ft and I believe those areas are included in rent and rateable value calculations.I would like to know however as a side issue if it is possible to do this without the offices being self contained. For example if there was an open plan space, where the allocated spaces for all 4 'offices' were only to be used by the company sub letting that space.I am under the understanding that 'licensing' the space will not allow me to use each company's business rate relief however if it is still possible to use licensing rather than subletting I would prefer to stick with licensing.
Expert:  Ash replied 9 months ago.
If its self contained then yes each can apply for business rate relief. If its not self contained then no, because in that case the Landlord would be responsible for the rates.But if self contained and there is a lease then they can be rate relief.If its a licence, you are correct as this gives no security.Can I clarify anything for you about this today please?Alex
Customer: replied 9 months ago.
Alex,Ok so licensing won't work...I must use sub letting/tenancy agreement?re self contained - so these 4 offices would be self contained as far as the VOA were concerned? Do you have access to the voa definition of self contained or are you using 'common sense'?How would the shared hallway, bathroom and kitchen be dealt with re rate relief? Can I apportion 1/4 of the space to each office?
Expert:  Ash replied 9 months ago.
I am using common sense? In terms of shared facilities then yes 1/4 of space should be fine. But clearly the offices need to be self contained. Does that clarify? Alex
Customer: replied 9 months ago.
Thanks Alex, so my take-away from this is:-1. I can't using licensing of offices, I must use sub-letting of offices.
2. My sub letting tenants will be liable to pay the business rates.
3. When the sub letting tenants apply for rates relief they can include 1/4 the square footage of the 'shared' parts while still stating that they have a 'self contained office'
Expert:  Ash replied 9 months ago.
1. Correct2. Yes3. YesDoes that clarify?Alex
Customer: replied 9 months ago.
Thanks Alex, yes that is clear. Would it be possible for me to handle all the paperwork for the business rate relief, i.e. the small business sub tenant just pays rent and I handle everything else or does the tenant need to get involved? And lastly is the relief 'retrospective' i.e. the tenant first needs to pay rates and then asks for relief and gets a rebate?
Expert:  Ash replied 9 months ago.
No, they need to do it because otherwise its not at arms length.Does that clarify?Alex
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience: Solicitor with 5+ years experience
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Customer: replied 9 months ago.
Yes thank you

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