12 September 2013 by

Commercial Property: Update

Premises used for storage

I am not sure how many of you are aware, but the VAT exemption for premises used for the purposes of storage has been withdrawn. HMRC recently published further information explaining the ramifications of the changes.

If premises are used for storage purposes and VAT has not in fact been charged, the obligation to account to HMRC for VAT that should have been charged is likely to revert to the landlord. The landlord may not be able to recover this from a tenant if the tenant’s obligation to pay has not been provided for in the tenant’s lease.

It is important therefore for landlords to note and to monitor their tenant’s use of premises, and to ensure that the obligation to pay VAT is included in the tenant’s lease.

Break notices

A recent High Court decision has found that a notice was effective to trigger a break clause in a lease, even though the notice failed to include the wording specified in the lease. (The failure to include all required wording has often been held to be fatal to an attempt to exercise a break notice.)

Whilst this may be slightly reassuring for a party proposing to exercise a break right, it is unwise to hope for a favourable court decision and much better to consider the terms of any break clause (or other provision in a formal document that sets out notice requirements) and ensure that these provisions are strictly followed.

The decision, after all, could have gone the other way!

Business rates

The High Court has held that a tenant, who had taken a lease of premises for 43 days for a nominal rent, to be used for marketing and advertising services, had occupied the premises for business rates purposes.

This was in spite of the tenant’s apparatus occupying a relatively small space and the local rating list describing the premises as “warehouse and premises”.
When the tenant vacated, this meant that the landlord was exempt from paying empty rates for six months.

The local authority tried to argue that the tenant had not occupied the premises because they were not used as a warehouse, and in the alternative, that the tenant’s occupation was so minimal as not to amount to actual occupation. Fortunately, for the landlord, this argument failed.

If you would like to discuss any of the issues raised in this e-news or any other commercial property matters please contact us on 0207 288 4700 or email us at info@boltburdon.co.uk

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