HM Revenue & Customs (HMRC) made headlines this month after it sent thousands of backdated tax demands to businesses with offices in communal blocks.
Known as the “staircase tax”, businesses were penalised for how many rooms in a block were being used and how they were connected.
Those with more than one office space linked by a communal lift, corridors, or stairs were charged more, as opposed to, an office of the same size but located in one space.
The charges, which are being backdated to as far as 2015, will also apply to firms that have access to a car park, reports reveal.
It means that the value of each “additional” building does not qualify for small business rate relief.
It is the result of a recent Supreme Court ruling, which the Valuation Office Agency (VOA), which sets business rates, says clarified the law and given it “no choice” but to send fresh demands.
It is common that the total value of the backdated charges run well into the thousands of pounds.
The Treasury Committee chief, Nicky Morgan, branded the move “unfair”, and asked how many businesses were affected by disproportionate business rates bills.
“On the face of it, it seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private,” she said in a letter to Melissa Tatton, chief executive of the VOA.
“It seems particularly unfair for the increase in rates to be backdated. I have written to Ms Tatton to ascertain the reasons for the VOA backdating it.”
The Federation of Small Businesses (FSB) estimates that some 80,000 properties could be affected.
“No small business should receive a sudden tax hike of 5,000 per cent simply because a workspace has been separated, for years, by a communal area, stairway or lift. Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises,” said Mike Cherry, national chairman of the FSB.
“This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently – to correct this defect in the UK tax system.”
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