They are reassessed, normally at five yearly intervals and this is known as a 'revaluation'. The last revaluation was in 2010 and due to a delay, the next revaluation will be 2017.
For the past six years, businesses have paid business rates to Local Authorities on the basis that a business occupying multiple floors in a building would be assessed on the basis that they occupied one property. For example, a business tenant occupying multiple floors in an office block under one lease would be assessed on the whole lease demise, regardless of whether or not the tenant needs to pass through the common parts of the building to access different floors.
The 2015 case of Woolway v Mazars means that the way businesses are assessed for business rates could change in 2017. The change could be confusing and costly for businesses as the decision by the Supreme Court in Woolway v Mazars means that if a business occupies multiple floors in a building and those floors are not sufficiently connected, then those floors are likely to be seen as separate properties for business rating purposes. One indication of insufficient connection is not being able to go from one floor to another without passing over land of another (such as common parts in a multi let building). This is regardless of whether the business has one lease, demising those multiple floors. This could be problematic especially if areas such as receptions are defined as common parts which is quite often the case in large modern office blocks.
The Supreme Court laid down three tests in Woolway v Mazars where there are questions over whether distinct spaces under common occupation form a single property for business rates purposes. These tests are geography, functional and objective necessity and can be summarised as follows:-
If you would like further advice on how your business premises is likely to be assessed, please contact Chris Mullett in ourCommercial Property Law Team on 0117 314 5241.