Business rates break for companies in administration

Companies in administration are to get a permanent exemption from empty property rates, Local Government Minister John Healey announced today (Monday 17 December).

Communities and Local Government has also decided that empty listed buildings like shops, offices and visitor attractions should continue to qualify for tax concessions because of the extra work required to bring them back into beneficial use.

The Minister has also rejected bringing in immediate new rules to tackle possible deliberate dereliction by unscrupulous owners to avoid empty property rates although he promised the situation would be monitored carefully.

He was publishing the Communities and Local Government response to this summer's 'Modernising Empty Property Relief' consultation which asked the views of property owners, developers, surveyors and councils on potential reform of detailed aspects of the empty property rates regime.

John Healey told the House of Commons in a written statement: "It would be an extreme step for a property owner to go to the lengths of deliberately vandalising a potentially valuable asset so that it is beyond economic repair and I do not believe this is a likely response to the Government's reforms to make more efficient use of land.

"I have concluded that the existing circumstances do not warrant the introduction of anti-avoidance regulations at this stage. However, I am clear that, if it appears that there is evidence of measures being taken by owners of empty property to avoid payment of empty property rates, the Government will not hesitate to use its powers.

He said that his department would work with the Local Government Association, the Valuation Office Agency and the Institute of Revenues Rating and Valuation to monitor the impact of the reforms and assess whether regulations should be introduced in the future.

His decision on companies in administration was a consistent view put to us in consultation and brings such businesses into line with those in liquidation and individuals subject to bankruptcy proceedings who already enjoy exemptions: "We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible. A permanent exemption will remove any potential for decisions about whether to enter administration to be distorted by differences in rates liability."

The announcement was welcomed by English Heritage. David Tomback, Development Economics Director, said: "Historic buildings are an asset for any local area and we are delighted that the Government continues to value the important role they play in regeneration and creating a sense of place. We hope that these new exemptions will allow more time for owners to find beneficial uses for historic buildings that have fallen vacant, and we welcome the Government's engagement in this important issue."

The department is now drafting the relevant secondary legislation to give effect to the reforms on empty property relief including introducing the new six month exemption from empty property rates for vacant industrial and warehouse properties, as announced in the 2007 Budget.

The aim is to lay this secondary legislation before Parliament so that all aspects of the new reforms to empty property relief can come into effect on 1 April 2008.