IRRV West Midlands Association 17 th May 2012 Corporate Shenanigans Toby Holt

Corporate Shenanigans The Charity Scam The not the MVL scam The actual MVL scam The future?

Short Term Letting Tenancy of only 6 weeks Can the landlord or tenants demonstrate a genuine and continuous 6 week period? Does the landlord let you know AFTER the tenant has vacated Does the letting conveniently fit with the timescales?

Use of premises by the owner The owner could occupy the premises himself For storage?? Must be genuine and continuous occupation

Letting to a Charity Charities liable for only 20% whilst in occupation and pay no empty property rates Landlords can pay the 20% as a charitable donation Do they really occupy? Tents, balloons, posters – are they genuine occupation? The web has ads encouraging people to avoid business rates Ratesrecovery.com Businessratesangels.webplus

What the Charity Commission Say be assured that the tenancy agreement is for the exclusive benefit of the charity, will further the charity’s purposes and is in its best interests ensure the property is genuinely required and is fit for purpose consider the potential liability of the charity to pay outstanding rates if the local authority disputes occupation and refuses discretionary rates relief very carefully safeguard the charity’s independence and ensure the charity is not being abused for the benefit of a commercial company where appropriate, take suitable professional advice, including legal advice, before entering into a tenancy agreement

Charity Commission “The Charity Commission has been made aware of over 700 tenancy agreements where this may be the case. We have been examining whether the trustees of the charities involved have properly discharged their trustee duties when making the decisions to occupy those properties to further their charitable purposes, and whether any benefit to the landlord is incidental to that.”

Suffolk Libraries Suffolk moved it’s libraries into an Industrial Provident Society Saved approx £300k in rates Saving for Suffolk but not for the country Fair?

The MVL but not a MVL scam Company A signs a lease with the landlord. On the same day it passes a resolution to place itself into Members Voluntary Liquidation BUT no liquidator is nominated Companies House records that the Company is in liquidation because it has received a copy of the resolution In effect the company is NOT in Liquidation Wind it up?

Remedies? The Insolvency Service wound up 13 companies in the public interest for operating such a scheme in July Avoidance of rates amounted to £8.9 million Report any similar instances to Company Investigations – part of the Insolvency Service

The real MVL scam Sign a lease Actually place the company into Members Voluntary Liquidation The Insolvency Practitioner just sits on the case allowing the landlord to save the Business Rates Brightgate Property Services Limited Same premises as one of the 2011 Liquidations!

Remedies? Report the Insolvency Practitioner to the Official Receiver They have promised to take action against any Insolvency Practitioner who acts in an avoidance liquidation

The future (or post April 2012) Increased pressure on recovery staff to get in Business Rates Different approach to recovery? Using Statutory Demands and Insolvency much earlier to avoid being left holding the baby More attrition on the High Street “Blue chip” failures Who’s next after Clintons goes to the wall?

Questions?