A recent Supreme Court ruling means the VOA which recalculated business rates this year, can levy rates individually on offices on 
separate floors or corridors, where previously they were treated as a single premises. Some companies face rate increases of up to £15,000 as a result of the changes, which will be backdated to 2015 in England and 2010 in Wales.
The move is being compared to the Window Tax brought in during the 18th and 19th centuries which was based on the number of windows in a property. It had a significant impact on architecture throughout those centuries. In today’s world the Staircase Tax may not have the same long term impact on architecture but it will mean that companies occupying multiple floors in a building that houses more than one tenant will be charged thousands of pounds more than previously.
Business leaders and MPs are urging the Chancellor to close the loophole in the next budget and halt the retrospective charges. Companies that occupy an entire building or can access multiple floors via a private staircase are exempt from the increase.
They believe the change unfairly penalises medium-sized enterprises and start-ups, which tend to grow their businesses by starting out in shared offices before acquiring new office space in increments. Many are no longer eligible for rates relief, available to companies with premises that have rateable values of less than £12,000.
Some businesses will get a shock when they receive the backdated bills, not least of all because the Supreme Court had told the VOA to exercise ‘common sense’ and they seem to be ignoring this. At the same time HMRC officials who will enforce the Staircase Tax have admitted that they have yet to resolve one in five of all business rate appeals across England and Wales some of which date back as far as 2010.
If you’re a small business owner or have clients who will be hit by this backdated tax get in touch as it may be worth reviewing application of other taxes such as VAT on those businesses. Give us a call today to discuss how we can work together.
