In the current economic climate occupiers of commercial premises should be reviewing their liability for the payment of business rates and claiming all available reliefs. Landlords will need to be particularly vigilant, however, when dealing with premises occupied by a tenant in administration.
With effect from 1 April 2008 companies in administration no longer have to pay business rates in respect of empty properties. This is one of a number of exemptions existing under the legislation. The best-known exemption is the relief (available to all occupiers of commercial properties) from empty rates for the first three months (or six months in the case of industrial properties) of a void period.
It is important to note that the exemption for administrators runs concurrently with the three or six month exemption. As a result, when a landlord regains possession of premises where the tenant has been in administration, the landlord's entitlement to the three or six month rate-free period will depend on whether the premises have been empty during the period of administration. Where the premises have already been empty for a period of three months (or six months if the premises are industrial) there will be no further exemption from empty rates. Unless the premises have been empty for less than the three or six month period (in which case, an exemption can be claimed for the balance), full rates will be payable.
Some charging authorities may grant a further period of exemption when requested (generally because they have been unaware of the void period during the period of administration, which is more likely when the period is relatively short). Landlords should note, however, that this is not a correct application of the legislation and could be challenged, resulting in the landlord having to pay rates with effect from the date of obtaining possession.