2011 has indeed been a challenging year for businesses throughout the UK. In the current climate it is vital for organisations to take advantage of available cost savings where possible.
Our team has found that despite this need to act and work as efficiently as possible, a high number of small and medium-sized enterprises are still unaware of the potential monies that could be recouped, following changes in operations or material alterations to business premises.
Business rates, capital allowances, utilities and internal work spaces are all potential sources of savings that sometimes go unutilised.
When it comes to paying business rates, if your property has undergone a physical change such as the removal of plant and machinery, part demolition or a change in occupation, then appealing its rateable value can prove a shrewd business decision and could result in large savings.
Partly vacant commercial premises can qualify for rates relief but like so many tax related issues, it is for the rate payer to identify and proactively seek the reduction and as such businesses should seek professional help.
There is no doubt that the Government’s decision to reduce the threshold on which business rates are charged on empty properties from £18,000 to £2,600 for the financial year 2011/2012, will have imposed a significant burden on many businesses.
Unused industrial and warehouse premises can qualify for six months of rates relief and owners who may be liable for a rates charge should take proper professional advice, to either avoid or lessen their prospective liabilities. This may include promoting short term and flexible lettings, or moving tenants around multi-let buildings to limit rates charges.
When negotiating new lease terms, the parties need to clearly agree who will receive the benefit of any empty rates relief because this type of saving is attached to the property, not the rate payer. It is common for tenants to have used up the relief before handing back the property leaving the landlord with an immediate liability and no new tenant in prospect.
Other significant bills such as sewage and drainage charges are based on site specifications, so you may need to get advice to guarantee that the correct footprint of your property or site is being used to calculate the bills.
For those who have undergone internal changes such as staffing size or who have invested in remote working IT systems – a closer examination of the internal property structure could achieve savings from a work space redesign.
Consider too, the fittings and machinery within a building as a way to make additional reductions through increased capital allowances, or why not turn surplus machinery into cash through relevant disposal services.
Capital allowances can be worth as much as 30% of the purchase price of the building. From April 2012, it is likely that the Government will change some of the rules around capital allowance claims against plant and machinery, and impose a time limit to make a claim for tax relief of this type.
So seek out specialist advice now to ensure you receive the relief your business deserves.
Richard Farr
Partner, Rating and Regeneration
(0191) 269 0115
richard.farr@sw.co.uk
