5 ms·
This is a massively complicated and nuanced issue that has kicked around the Supreme Court in the UK. Here's the game: 1) There are taxes levied on business u
by aresant 7y ago
This is a massively complicated and nuanced issue that has kicked around the Supreme Court in the UK.
Here's the game:
1) There are taxes levied on business users of commercial office property in the UK.
2) Independent small businesses may apply for tax relief if they rent a space that has a rateable value of less than £15,000. (1)
3) The intention of this relief was to provide small business users with a fighting chance to be able to afford office space.
4) The "total rateable" value" of a massive open coworking space is obviously higher than £15,000 but if you're a business renting 2 desks maybe you should qualify for the small business relief?
5) Coworking landlords figured out that they could qualify for the tax breaks THEMSELVES if they cut their own properties into dozens (or hundreds) of small plots or pieces called hereditaments.
6) Then in effect you have these hundreds of hereditaments claiming the small business tax and collecting rent from a small business.
WeWork is a slightly worse abuser of the game played by virtually all coworking operators in the UK.
The "coworking" lobby has published a study outlining their view (1).
At the core Her Majesty's Revenue and Customs set up a system that didn't count on the inevitable "enterprise" player paying tax attorneys to abuse them, and the two sides should probably sit down and sort out something reasonable.
But instead they're suing eachother to oblivion and employing armies of attorneys :).
(1) https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief https://www.gov.uk/apply-for-business-rate-relief/small-busi...
(2) https://lep.london/sites/default/files/The%20affordability%20crisis%20-%20business%20rates%20aren%27t%20working%20for%20london%27s%20open%20workspaces.pdf https://lep.london/sites/default/files/The%20affordability%2...
- moron4hire 7y agoI guess law school grads gotta get paid somehow...
- munk-a 7y agoLaws are hard and the legal system is complicated but (4) is where it breaks down to me. If there was a company leasing 100k worth of space in total they clearly shouldn't qualify, if the client is leasing 10k worth of space, maybe they should qualify... if that company mostly closes but has time to run out on their lease which they use by sub-leasing the property then still, _maybe_ they should qualify, their sub-leasors probably should qualify assuming the property isn't marked up in the sub-leasing. Any company attempting to declare stewardship of multiple hereditaments should have the book thrown at them. Anyone using subsidiary companies to distribute their hereditaments should also have the book thrown at them... I'll just assume the UK got into this weird tax system because real-estate investors tend to have an out spoken amount of power in politics and tend to create some of the most absurd tax loop holes... especially since there is a specific coworking lobby.
- deleted 7y ago[deleted]
- Turukawa 7y agoI've been assembling commercial ratepayer data across the UK quarterly for the last three years. While WeWork is certainly not alone, what is remarkable is the explosion in micro-hereditaments over the past year. We're talking median office sizes at 4-6m2,where some of the more established services are significantly larger. And the approach of fragmenting offices into ever-tinier spaces is accelerating.
- abraae 7y agoSounds like an opportunity for a HaaS business (Hereditaments as a Service) where small businesses could band together and reap the benefits themselves, rather than it flowing to an aggregator like WeWork.
- paxys 7y agoSounds pretty shady. What's to stop a large business from breaking up its office into "hereditaments" and claiming tax rebates for each of them?
- crispyporkbites 7y agoYou only get the relief if you have one office/premises
- james_s_tayler 7y agoBreak the company into one business unit per employee.
- crispyporkbites 7y agoYou’re going to register a new company for every employee? That would be an insane admin overhead
- solidsnack9000 7y agoAt the core Her Majesty's Revenue and Customs set up a system that didn't count on the inevitable "enterprise" player paying tax attorneys to abuse them... Which, to be honest, is falling down on the job. Britain has been around long enough.