A recent High Court judgement affecting a charity and premises within the Cambridgeshire area has caused confusion as to the extent to which a property must be occupied in order to avoid empty rates charges.

The current regulations state that empty buildings are exempt from payment of business rates for a period of three months, after which most businesses must pay the full amount.  However industrial/warehouse premises are exempt for a further three months, while buildings with a Rateable Value under £2,600 and properties owned by charities remain exempt.

The recent High Court case found the Public Safety Charitable Trust Limited (PSCT), which occupies 1,500 buildings across the UK including premises in Sawston and Linton in Cambridgeshire, and offers free wi-fi and broadcasting Bluetooth safety messages from premises, to be liable for payment of rates because the buildings weren't sufficiently occupied.

The judge commented that the transmitter box typically installed in a building, similar in size to a domestic broadband box therefore taking up a minimum amount of space, provides free wireless internet access to anyone within range of the transmitter.  The transmitter also provided the broadcasting of Bluetooth messages on crime prevention and public safety.  The provision of such a free wi-fi service and free messages is a service which is charitable in nature and the PSCT is a Registered Charity.

However, he went on to add "it is reasonable to infer that Parliament intended that the substantial mandatory exemption from rates for a charity in occupation of a building should depend upon the charity actually making extensive use of the premises for charitable purposes (i.e. use of the building which is substantially and in real terms for the public benefit so as to justify exemption from ordinary tax in the form of non-domestic rates), rather than leaving them mainly unused".

This case not only brings into question the use of premises for charitable purposes, but also the extent to which a property needs to be occucpied to enable it to then be vacated again to qualify for a further period of exemption.

Another recent case between a Local Authority and the well-known Cash 'n' Carry chain Makro, determined that even though only 0.2% of a 140,000 sq ft building was occupied, once it was fully vacated again it was exempt for a further period of six months.

If you have a rates issue you wish to be investigated further then call one of our offices for more information and advice.