Can I avoid Business rates on a Council Property by using a Virtual Office?

[pentiumofborg]

I live in a Council property and am starting a business. I want to avoid opening paying business rates and planning permission issues so I'm using another address ie one of these Virtual Office packages that offer a Mailbox and mail forwarding service. I'm prohibited from using my Council home as a base for business and face eviction if they think I'm running a business from there. Will using a Virtual Office be sufficient to avoid complications? By complications I mean Business Rates and possible eviction, my rental agreement states I cannot start a business from my home without permission. Asking for permission will start the whole assessment of Business Rates and highlight the lack of planning permission.

[Ed999]

In my opinion, you will in reality still be running the business from home, and will therefore be in breach of your tenancy agreement - and liable to eviction - if you fail to obtain the landlord's prior permission if that is an express term of the agreement.

 

As to the other issues, you should get tax advice from your accountant, not seek it on this forum: we are only sharing our experiences of short let tenancies. We don't have any experience of business tax planning.

[pentiumofborg]

I'm struggling to start up. So, what if I get a Hotdesk? This is a rented space on a pay as you basis, so I won't be working from home. Will that be alright? Also, I'd be simply selling webspace at the client's premises so my home would be somewhere to live.

[mr2mr2]

without sounding rude... could you not call your councils general enquiries number and ask them... as it a general enquiry i would have thought they would not have asked for your address etc???

i know in the past when i used to live in council rented.. they never asked my address, they simply answered any questions to the best of their ability or tried to pass me to someone how could help....

 

just a thought...

[pentiumofborg]

You're not being rude, thank you for taking the time to write something.

[Ed999]

I'm struggling to start up. So, what if I get a Hotdesk? This is a rented space on a pay as you basis, so I won't be working from home. Will that be alright? Also, I'd be simply selling webspace at the client's premises so my home would be somewhere to live.

 

 

I think you'll have to explain what a 'hotdesk' is, and what the nature of your proposed business is.

 

There might not be a breach of the tenancy's terms and conditions if you were, for example, an author and were writing a book, even though that's a business use in a sense.

 

But if you were a dentist and wanted to run your business from your front room, that would be a breach. So would running a car repair or breakers business in your back yard.

 

As soon as clients or buyers start visiting your premises, you've definitely crossed the line.

 

But if you were a travelling encyclopedia salesman, visiting other people's premises, the mere fact that you keep some stock at home wouldn't necessarily make your home the place where the business is carried on.

 

This type of restriction is often designed to prevent any noisy or smelly or otherwise noxious activity from being conducted in a residential area; so the Council's policy toward YOU might depend on what, precisely, you are doing.

 

Bear in mind that for tax purposes, the Inland Revenue can consider whether you are using one room as an office, for certain tax reasons; hence creating a mere office in a spare room can potentially be classed as 'business use'.

[pentiumofborg]

Thank you for your kind reply. A hotdesk is a hired desk which you pay as you use to work, usually on an hourly basis or part of a packaged fixed number of hours monthly deal. I'll be selling webspace to businesses, so there would be no physical stock for storage at any physical location. There would be no visitors to my home whatsoever or deliveries. I would hire meeting rooms for any client meetings if required. I've heard the IR can backdate Business Rates for up to 7 years which has me worried. I won't be making much money so setting aside an estimated amount for use of half a living room as somewhere to keep my laptop on a desk is rather daunting at this point.

[Ed999]

I don't want to put you off!

 

I don't say it's likely the Revenue will come after you for more tax. I was just trying to define what the law views as 'business use'.

 

You don't appear to be breaching your tenancy.

 

From your description, I don't see any indication that you are carrying on any form of business at your home such as would justify a landlord in seeking to terminate your tenancy.

 

Tax law, however, is outside my experience, and definitely off-topic here. Business rates are such a specialised area of tax law that your best course of action would be to ask your accountant about them.

Edited July 1, 2011 by Ed999

[pentiumofborg]

Thanks for all that, I'm not put off and will do this because I have to! I'll be registering the business at the virtual office where business rates would be paid by the virtual office company, so I'm wondering how the IR would actually know to chase me up?

[MARTIN3030]

These days,Councils are more tolerant and from what you say,you wont be exactly be worrying your neigbours.

I know many business start ups who have begun from home in both Council and Housing association houses.

One of Camerons pre election pledges was in fact to introduce changes in legislation that would allow this.

That was in consideration of a knowledge not only of those who have had problems in doing it,but moreso those who would be potentially minded to go for it if the red tape was removed.

As far as HMRC are concerned it would fit in with existing criteria whereby business owners claim relief for using a bedroom for an office,and portion of their home phone bill for business.

In view of the current climate,and the state of the economy,I personally think that there will be steps taken to legislate on this sooner rather than later.

It would do no harm to call your Council annon and get hold of the right person to get their position.

I would also speak to your local Chamber of Trade whose business is to know these things

Thirdly,contact your local MP -which you can do online,and see what they say,and also to get you an update on when Cameron and Co will be moving on their promise.

I am awaiting a response myself on this from Vince Cable.

Keep us posted on what you find out,I will report here the same.

[Ed999]

Thanks for all that, I'm not put off and will do this because I have to! I'll be registering the business at the virtual office where business rates would be paid by the virtual office company, so I'm wondering how the IR would actually know to chase me up?

 

 

You'll be filing income tax returns, and the business which you are renting space from will be filing returns for income tax or corporation tax, and one or both of you might be filing VAT returns.

 

You'll be surprised how easy it is for the Revenue to spot the true nature of the business arrangement you're entering into, from the mass of tax-related paperwork that's bound to be involved!

 

 

 

Thirdly,contact your local MP -which you can do online,and see what they say,and also to get you an update on when Cameron and Co will be moving on their promise.

 

 

Click here: Contact your MP on-line

[pentiumofborg]

I'm actually quietly outraged about this alarming obstacle to starting my business. So as a salesman, who holds no physical stock at home, has no clients visiting, trading via a Mailbox address; I'm hoping that once my tax return is filed next year I am not faced with a demand of £4,500 from the IR for using my home as an office even though I am clearly not. I'll try and negotiate for half a living room as an office, after the demand, if that's possible? How amenable are they to negotiaton once they have their sights set? Am I going to have to resort to the courts? Would I get legal aid?

[Ed999]

I wasn't joking when I said that we can help you with your tenancy related problems, but that for business start-up advice you need to speak to an accountant.

[bedlington83]

Seriously pentiumofborg talk to an accountant. You're starting a business so will need to at some point, even if you trade as class 2 self-employed (which I assume you're intending. If you don't know what I mean you definitely need to speak to an accountant.)

 

I'm confused about your accommodation proposals. Aren't you renting a desk and office somewhere? If so the subject of using part of your home is irrelevent. In any event, as I understand it, you are allowed to use part of your home as an office without needing to declare it as business premises but I am neither a lawyer nor an accountant

[pentiumofborg]

Thank you everyone! I've decided I'm going to start my business anyway. Running the gauntlet!

[Steve__M]

My partner was an IT contractor working and running a business at home for a number of years.

 

The accountant suggested claiming housing costs as expenses for the business (heating, lighting, insurance). There was never any question of the house becoming a business premises.

 

To all intents and purposes, what you are doing sounds similar.

 

Good luck. I imagine its a tough market.