Coworking Operator Takes Business Rates Dispute To Landmark Judicial Review

A new business rates policy for flexible office companies is going to be tested in court. 

Hugo Warner, co-founder of workspace Fisheries London in Hackney, has had permission to apply for a judicial review of his backdated business rates case granted on “all grounds.”

He claims his business has been singled out with an “illegal” £500K additional tax charge dating back to 2023, representing a 150% increase to the rates already paid.

HM Revenue & Customs Valuation Office, which handles business rates decisions, chose to rerate the Fisheries shared office building as a single establishment, rather than charging it as separate units, according to Colliers Head of Business Rates John Webber, who is advising the Fisheries.

As revealed by Bisnow, the VO had been looking to take a case into tribunal to establish a clear precedent, but operators had been reluctant to contest the policy through the courts. 

The issues revolve around a change whereby operators that once benefited from distributing rateable values across multiple occupiers — often allowing smaller tenants to qualify for reliefs — now face assessments at the building level, resulting in a higher overall tax burden that cannot easily be diluted or passed on. 

The owner of the Fisheries said that if he is forced to pay the backdated bill, the company would become insolvent and go into administration, and he claimed he has been singled out as a test case.

In a letter Rachel Reeves sent to Warner’s MP, backbencher Dame Meg Hillier, the chancellor defended the approach and wrote that the VO had concluded that “most serviced offices will need to be assessed as a single property, unless clear evidence demonstrates a need to split.”

Decisions were being made on a “case by case basis,” but the agency was looking to “clarify the application of case law on serviced offices.”

The chancellor added that applying a single rating to the building that falls on the operator would mean that small and microbusinesses working inside the office “face no business rates at all.”

“The VO’s behaviour has been arbitrary, outrageous and often contradictory,” Webber said. “It does not follow new case law, despite its claims to the contrary. It is just trying to justify its new policy by picking on one small company which it thinks it won’t be able to fight back.”

“We believe this is a Treasury bid to raise extra revenue,” he added. “If it is successful, the government could consider rolling this damaging policy out against the serviced office sector more widely, which would be a massive hit to providers of flex space. It would be a mad thing to do, particularly in the current economic climate. We will be fighting this unfair tax all the way.”

When granting permission, Justice Beverley Lang said, “The claimant has raised arguable grounds which merit consideration at a full hearing.”