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Business rates on industrial buildings


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After some time we (me, my dad and my brother) are now in a position to purchase an industrial unit to pursue our MV restoration hobby in as we have wanted to for some time.

We have found and had an offer accepted on a great building on a trading estate but on contacting the ratings office to confirm, as we had been led to believe, that we would not have to pay business rates on the property that now appears to not be the case. Making the whole proposition entirely unfeasible.

Does anyone know of any way round the law that would allow us to pursue our hobby in an industrial building?

 

Cheers, Richard

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The only two ways I can think of, is either Agricultural use, or some relif if you are a 'Start up' buissnes. Rates are a complete nightmare, a few years back indoor riding schools were to be classed as 'Commercial buildings' and the rates were set to rocket. Unfortunatley if you work out the earning potential of a factory as compared to a riding school, the diffrence is galactic. A compromise was worked out, but costs still rose.

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I met a chap last year who does pretty much as you intend to, he got round the business rates thing by calling his place a museum he only need open a handful of days to gain rate exemption. He said with a grin " I open Christmas Day, Cup Final day and two Mondays in December, never had a visitor but it keeps the council happy ". Have you tried looking into this ?

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I met a chap last year who does pretty much as you intend to, he got round the business rates thing by calling his place a museum he only need open a handful of days to gain rate exemption. He said with a grin " I open Christmas Day, Cup Final day and two Mondays in December, never had a visitor but it keeps the council happy ". Have you tried looking into this ?

That's a plan, I'm gonna open my depot as a HYDRAULICS MUSEUM!!! Lol

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I just checked with a friendly Rating Advisor (essential for anything out of the ordinary, trust me….) and he says this is acknowledged as a grey area. Whilst there may be room to negotiate, two factors go against your situation:

 

1. It is on an established business estate

2. There is case law (often used at conferences) of someone who used an industrial building for his private collection of vintage cars - he lost the case.

 

A good rule of thumb - can the building be readily let as a commercial property? If so it will be difficult to get out of business rates. If it were adjacent to or annexed to a private dwelling there could be more optimism.

 

The museum thing is interesting. I know of an agricultural building used as a museum that does not attract rates - this may be a possibility for you, but I would imagine a substantial proportion of the building/site would have to have the appearance of a properly laid out museum.

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I just checked with a friendly Rating Advisor (essential for anything out of the ordinary, trust me….) and he says this is acknowledged as a grey area. Whilst there may be room to negotiate, two factors go against your situation:

 

1. It is on an established business estate

2. There is case law (often used at conferences) of someone who used an industrial building for his private collection of vintage cars - he lost the case.

 

A good rule of thumb - can the building be readily let as a commercial property? If so it will be difficult to get out of business rates. If it were adjacent to or annexed to a private dwelling there could be more optimism.

 

The museum thing is interesting. I know of an agricultural building used as a museum that does not attract rates - this may be a possibility for you, but I would imagine a substantial proportion of the building/site would have to have the appearance of a properly laid out museum.

 

And here we go again! What is a 'reasonably' laid out museum? How about a walkway, dividing vistor from work area like a MOT viewing area. The museum would demonstrate practical mechanics, the construction of a vehicle and it's components nad the restoration techniques used. Sell the idea to a daytime TV channel and you could show a profit! I've used such setups outsides at shows, attracts quite a few visistors.

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How would a "storage business" stand - like big yellow box , you turn away undesirables - your choice. You may never have any spare space to rent LoL in fact the possibility will be remote. Business registered in name of one family member (sole trader) , the property ownership of course shared amongst family ,,

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How would a "storage business" stand - like big yellow box , you turn away undesirables - your choice. You may never have any spare space to rent LoL in fact the possibility will be remote. Business registered in name of one family member (sole trader) , the property ownership of course shared amongst family ,,

 

Commercial buissness = Full rates. The trick is to find the compromise that keeps both sides happy. Daft thing is a lot of Private Schools and boodles per term are 'Charitys' and cane buy cheap EEC subsididised supplys! Got to be worth spending a few quid on a Rating advisor as suggested.

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You can currently get up to 100% rates relief on your first industrial premises depending on its rateable value

 

You can currently get up to 100% rates relief on your first industrial premises depending on its rateable value.

Did no one read this?

If you aren't in business you should get this without problem or even question. It is EXACTLY the same as claiming your free historic road tax; you get a bill for £0.00. What happens when this stops I don't know?

It may be a problem in the South East where the actual value of a telephone box and site would send you over the threshold.

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Let us know how you get on.

 

Yes, will do.

 

Thanks for reiterating the 100% relief thing, problem for us is that the rateable value is near to the £12k upper limit which by my calculation means we still pay 90% of the rates.

 

Hey ho, we'll see what happens.

 

Richard

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I went round and round this loop nearly 20 years ago and I'm afraid I got no joy at all, so eventually I moved 200 miles west and bought a farm, regulations may well have changed in the intervening time so I wish you luck.

 

Pete

Edited by Pete Ashby
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  • 4 months later...

Hi. You have to convince the HMRC that the building is a garage (for the storage of a motor vehicle) and they will then exempt the structure. Its not easy. It took me two years to carry out the same exercise and the file is about an inch thick.

 

Their definition of garage is quite tight. Can advise you further if you go ahead but you are likely to have to pay the rate to the local authority and then they will return all payments to you if you win. Good luck. David

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David, it'd be interesting to learn a bit more about your case, as it might inform many other cases. Back in the mid '90s, the Valuation Office levied rates on a lot of premises used for storing historic vehicles privately after the Andrews vs Lumb case. Looking at the current VO rating manual and particularly the comment about the reasons for Lumb losing the case, it looks as though they may have been a bit naughty about their interpretation of the ruling, as they used it to rate premises used wholly or mainly for the storage of private motor vehicles.

 

The current VO rating manual is ambivalent on the subject. It suggests any building used wholly or mainly to store a private motor vehicle (including vehicles, plural) is a private garage and not rateable, but then interprets lorries, taxis, military armoured vehicles and the like as necessarily commercial and goes on to imply that a collection of cars can't be private. These comments are not supported by justification and I can't find case law on them, so I suspect they're open to argument - possibly in court!

 

http://www.voa.gov.uk/corporate/Publications/Manuals/RatingManual/RatingManualVolume4/sect2/part2/b-rat-man-vol4-s2-ptb.html

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Sean. You are right but the emphasis is on whether you have commercial gain not just storage of an historic vehicle. If you run a museum or claim monies for viewing etc then that is commercial use. I am away at present but will access my file to include the case used to win my own exemption when I get home. I was prepared to go to court and was as close as two days away from a rate appeal hearing when the HMRC caved. My local MP had also entered the fray and was leaning on them. I do have interesting correspondence which confirms this grey area. My case was individual however due to the substance of the building (its historic use) and its location which was predominantly rural as opposed to being contained within an industrial complex. If I still have copies of the appeal docs you are welcome to have a copy. Cheers. David

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