14. Who is liable?
A liability for the business rate
will only arise if there is an entry in the
local rating list
for a property and an
exemption is not in force. Once those are
established, then where a property is occupied the ratepayer will
usually be the occupier and where it is unoccupied the liable
person will usually be the owner.
More unusually the business rate
is also charged on an 'advertising right'. It is the 'right' to
advertise that is rateable and the liable person is whoever has the
right to use the advertising hoarding. As the liability is based on
the 'right' the liability will continue as long as the hoarding is
in place and irrespective of whether an advert is actually
displayed at any time.
14.1 The Ratepayer
Where a property is occupied the
ratepayer will usually be the person, including a corporate entity,
to whom the principles of occupation apply. In most cases the
identity will be obvious but there are circumstances where it is
not and careful consideration is required. An example is an
unincorporated club and in such circumstances there are many case
law decisions to help guide the decision as to liability.
Where more than one person meets
all the criteria they will have joint and several liability for the
business rate. Where two or more persons meet the criteria of
liability they shall be jointly and severally liable for the rate.
This means that each is liable for the full rate and not that each
has a liability in proportion to the number of persons jointly
liable.
14.2 'Occupied'
In the majority of cases the
issue of whether a property is 'occupied' is not in dispute and the
general understanding of a furnished or equipped property,
connected to the utilities and with people working inside is
accepted. The understanding is underpinned by a set of principles
that have been accepted in numerous judicial decisions. They
are:
- There must be 'actual occupation', simple entitlement to occupy
is not sufficient for occupation to be said to be occurring.
- There must be 'exclusive occupation' meaning that the occupier
cannot be excluded from any part of the property.
- There must be 'beneficial occupation' whereby the occupier
derives some benefit from his occupation.
- There must not be 'transient occupation' meaning that some time
rules apply.
14.3 Actual
Occupation
The fact of someone having a right
or entitlement to occupy a property is not sufficient of itself to
constitute occupation. There has to some physical and tangible
business or manufacturing equipment, and the conducting of the
linked business or manufacturing processes. If the processes are
not being conducted, but the equipment remains from when last in
use or will be used when the property is next in use, then the
property is not considered 'occupied' for business rate
purposes.
Some properties do not meet the
conventional criteria. One example is a property subject to
seasonal occupation. Because of their type or location some
business properties are used seasonally. Examples are seaside shops
or lodging houses and their rateable value reflect that fact with
occupation considered to continue throughout the whole year.
14.4 Exclusive
Occupation
Exclusive occupation means that
that nobody has the right to exclude the occupier from using the
property in a particular way. A typical example would be between a
landlord and lodger. These are often characterised by agreements
whereby the landlord retains to himself the right of use to the
whole property whilst restricting the rights of the lodger. In
those circumstances where both use the facilities of the property
it is the landlord who retains the right of exclusive
occupation.
14.5
Beneficial Occupation
'Beneficial' in this context does
not necessarily mean a financial benefit. A local authority may
occupy a property to fulfil a statutory obligation and therefore
the occupation is of benefit to them. A company that trades at a
loss receives a benefit from their occupation because it enables
them to continue trading. Where someone 'occupies' a property as
the employee or agent of another then, in general, it is the
employer who receives the benefit. An example is a school caretaker
required by his contract to live on the premises for security
purposes
14.6
Transient Occupation
Transient occupation refers to the
amount of time the occupation occurs and it has two types of
relevance. If the property is a permanent structure such as a shop,
office or factory then occupation for one day would usually attract
a rating liability. However if the property is less permanent, say
a builders temporary hut, then the length of time of its existence
will be relevant in determining whether a rateable property exists.
As a general guide existence for a year will probably mean a
property is rateable.
14.7 What happens about unoccupied
properties?
When a property is not occupied
there is a period of three months when there is no liability. If
the property is still unoccupied, and not exempt, then
the owner will be liable to the business rate at a 50% reduction.
Where the property is newly erected, or created as a result of
structural alterations to an existing building, then a 'completion
notice' must be served on the owner stating the date from which
the building is deemed complete and from which any liability or
period of exemption is to accrue.
14.8 The
Owner
The owner is 'the person entitled
to possession of the building'. Court cases have refined the
definition to include a trustee and a landlord who accept the
forfeiture of a lease but not a receiver 'entitled to
possession'.