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Government to seal off empty premises rates loophole

The six-week re-qualifying period has prompted a number of organisations to offer to find a tenant willing to take a short-term let at a nil rent for a period of maybe eight weeks, which then allows the landlord to claim the further three or six month exemption.

According to property firm Cluttons, to close the loophole the Government was considering implementing a minimum occupation period of 12 months on the property before it re-qualifies for the exemption.

When the present empty rate regulations were enacted the Government agreed to defer introducing anti-avoidance regulations unless or until there was proof of abuse

While the six week re-qualifying loophole could be viewed as tax avoidance it does enable the tenant to run a business at reduced costs and enables the landlord to survive the current recession.

Commenting on the disclosure, Peter Chapman, head of rating and compensation at Cluttons said: "Use of the current re-qualifying option is a sensible short-term solution for property owners, which if anything meets one of the Government’s main aims in introducing this charge of bringing empty buildings back into use and hopefully preventing the need to demolish a building to escape this charge."

Furthermore it is expected that the Government will seek to amend the regulations applying to the relief available to charities which occupy only part of a property upon which 80% relief is currently being claimed on the whole.

Presently a charity receives an 80% dispensation on its business rates, when occupying a property, so paying only 20% of the charge. The impact of the recession and the new charge has meant some property owners have been only too willing to let their empty premises to charities at either zero or nominal rent to avoid paying the charge, and for some charities, the prospect of new space at a nil rent with the 80% dispensation on rates has proved irresistible.

Listed buildings and those in administration are exempt from empty premises rates.

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