Property Week (website)
23 April 2018
PLA praises proposed revisions to counteract ‘staircase tax’
By Richard Hook Mon 23 April 2018
The government has amended its draft bill on business rates in multi-occupied properties ahead of its second hearing in the House of Commons.
The Property Litigation Association (PLA) has backed the revisions which have the potential to reverse the ‘staircase tax’ created by the Supreme Court decision in Woolway v Mazars in 2015. As a result of this decision, contiguous but not interconnected floors of a building were treated as separate property units and would not therefore benefit from a discount in business rates for larger spaces.
Known as the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill, it will confirm that contiguity will still be applicable in respect of a space between two property units that is not occupied or owned by the occupier, for example common parts owned by the landlord.
The PLA voiced several concerns during the consultation period including the fact that the wording created significant uncertainty over void spaces, especially in relation to a shared wall or where a ceiling on one floor was the floor of the above.
The government has now amended the contiguity test in the draft bill to include horizontal separation – where property units are on consecutive storeys of a building – and where the floor of one property unit lies directly above the ceiling of the other.
The other key amendment relates to the treatment of unoccupied properties. The revised draft bill now makes it clear that occupied units will still be treated as a single assessment if they are vacated on the same day but remain in the same ownership. They will no longer lose their status of contiguity.
Bryan Johnston, vice chair of the PLA, said: “These are critical changes to the draft bill that will achieve greater legal clarity for the benefit of ratepayers and practitioners alike. We are delighted that the government has listened to and, more importantly, embraced our views which will ensure that the final enactment is much clearer and certain.”