|
The issue of rate relief for social enterprises is a thorny one, unlike charities they are not entitled to the 80% statutory and 20% discretionary relief. Some CIC's in MK receive 100% relief some 50%.
Bates, Wells and Braithwaite have just issued this update:
Localism Act 2011 makes important changes which could impact on many charities and not for profit organisations
The Localism Act 2011 makes important changes to discretionary business rates relief which could impact on many charities and not for profit organisations, particularly those which operate nationally and organisations which work overseas.
Charities are entitled to a mandatory relief from business rates which means they pay at most 20% of the normal business rates charged on non-domestic property used for charitable purposes. Community Amateur Sports Clubs (CASCs) also pay 20% of the normal non-domestic business rates if the club's property is used wholly or mainly for the purposes of the club. Charities and other not for profit organisations that qualify for this 80% mandatory business rates relief can apply for discretionary relief for all or part of the remaining 20% rates payable.
The Localism Act 2011 introduces a two-part test to be applied by Local Authorities before granting discretionary rates relief. Once in force, the changes mean discretionary rates relief can only be given if the Local Authority is satisfied it is reasonable to give the relief and in making its decision, it has taken regard of the interests of its rates payers.
While charities, CASCs and not for profit organisations should be able to demonstrate why it is reasonable to receive discretionary rates relief, a national organisation or an organisation that works overseas may find it difficult to satisfy the second limb of the test, if their work does not directly benefit local rates payers.
Local Authorities could also argue that giving relief will mean that rates payers will have to pay more to cover the discretionary relief, and so giving it is not in their interests. As full discretion lies with Local Authorities, we fear that more local authorities will cite the current economic situation and relief not being in the interests of rates payers in order to either reduce, cease, or deny discretionary business rates relief.
|