Charity Commission investigating 'empty properties' let arrangements

Regulator looking at more than 700 instances where charities are claiming business rate relief

Charities have been claiming business rate relief
Charities have been claiming business rate relief

The Charity Commission is investigating more than 700 instances where properties might have been occupied by charities in order to claim rate relief for the landlords, rather than to use them for a charitable purpose.

The regulator said in a statement this morning that charities were approaching landlords and offering to occupy their properties because charities can claim 80 per cent relief on business rates, whereas businesses must pay the full rate on properties once they have been empty for more than three months.

In exchange for helping businesses lower their tax liabilities, charities might receive a donation.

However, the commission said that if charities did not make sufficient use of the property, they might not fulfil the requirements for rate relief.

"We have received information from a number of local authorities concerned about situations where charities are entering into tenancy agreements on commercial properties but where in practice the properties are, or appear to be, empty," said the statement. "Charities often claim they require the properties for storage or other purposes."

It was looking into more than 700 cases, the commission said.

"We are concerned that these charities may find themselves involved in what local authorities might consider to be business rates avoidance by landlords.

"This could potentially result in charities losing the discretionary discount and being required to pay 20 per cent of the business rates."

The environmental charity Healthy Planet last month defended its practice of occupying empty shops in exchange for a charitable donation, which has seen the organisation’s annual income jump from £13,000 to £1.14m in a year. An article in the Financial Times had quoted experts who said the move was "pushing this into the area of a scam".

John Brookes, marketing and communications manager at Healthy Planet, said the charity was legitimate in its dealings.

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