We recently successfully assisted a commercial leaseholder client who was disputing Business Rates bills exceeding £70,000 for a commercial property. Despite the client being the occupier on the record, on evidence provided, the council agreed that they were not liable for the bills.
Background and Reasoning
The client previously operated a restaurant at the premises. They entered a 5-year lease in August 2012. In August 2016, due to a family emergency, the client left the country. The business partner then took over the restaurant’s operations. They then agreed to take a sublease at the premises and become responsible for rent and other expenses, while the client retained leasehold ownership.
In June 2017, the client gave authority to renew the lease, believing the partner had officially taken over the business, although the lease name was not changed. The partner later incorporated a company continue operating the same business at the premises. The business ceased operations in June 2019 and the business partner became untraceable.
The client returned to the UK in 2020 and returned the property to the Landlord. However, they discovered unpaid Business Rates bills totalling around £70,000. The client learned from the local council that the partner and the company had not paid the Business Rates bills since the original takeover. After communicating with the local authority, in August 2024, the client received a revised bill for £58,533.36, despite having returned the property in January 2020 and not being the occupier since 2016.
We argued that the bill should be directed to the business partner and to the company for the period after June 2017, and to the landlord for any period after the property was returned. The reasoning for this was that the client had not been the actual occupier for those periods of time. We submitted sufficient evidence to prove the partner and the company’s operation including bank statements, accounts for the business income.
We also provided evidence to prove that the client had left the country and had not returned until 2020. Our client could therefore not possibly be occupying the premises for the purpose of Business Rates. The council agreed with our view and concluded the client was not liable for the bill.
Points to Take
Even though the leaseholder of the business premises is usually responsible for paying these rates, in some situations they are not the actual occupier. Liability should be clearly stated in the lease agreement, or any other sub-lease or contract of occupation. As a tenant or sub-tenant, it is important to read the lease or agreement carefully and if in doubt, to seek advice from a professional on the relevant terms.
The conclusion of who pays business rates, tenant or landlord, is essentially based on occupancy and lease terms. Every case is different depending on the specific lease terms. Understanding the lease and responsibilities regarding business rates is important for both landlord and tenant.
Also, do not delaying clarifying any disputed bill, if there is any issues that do not sit right, respond earlier is better than late.
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