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Pictured: The Fisheries offices in Hackney, East London. Its co-founder claims he has been ‘singled out’ by the taxman The founder of a co-working space has warned that his business faces collapse over an “outrageous” backdated business rates bill.
Hugo Warner, co-founder of The Fisheries shared office space in Hackney, east London, said his business had been “singled out” with a “highly unfair” £400,000 charge dating back to 2023.
The case has prompted fears of a stealth tax raid on shared offices in Wednesday’s Budget.
Mr Warner claimed that the Valuation Office Agency (VOA), which handles business rates decisions, had chosen to re-rate the shared office building as a single establishment, rather than charging it as separate units.
John Webber, the head of ratings at Colliers, the property agency that is advising Mr Warner, accused the VOA of “arbitrary and outrageous” behaviour, “picking on one small company because it thinks it won’t be able to fight back”.
When charged separately, the individual tenants were able to claim small business rates relief, with the administration of the taxes handled by the building operator.
But the change has left him facing a vast historical tax claim that threatens the future of his business. If he is forced to pay it, he said: “The Fisheries London would become insolvent and go into administration.”
Hugo Warner warned the higher business rates would ultimately be passed on to small businesses who rent flexible office space Mr Warner, 56, who founded coffee chain Benugo, has launched a legal challenge against the decision in what could become a test case for the industry. It comes amid fears that more shared office groups could be hit with sizeable business rates claims from local authorities.
In a letter sent by Rachel Reeves to Mr Warner’s MP, the Labour backbencher Dame Meg Hillier, the Chancellor defended the approach of the valuations agency.
Ms Reeves wrote that the agency had concluded that “most serviced offices will need to be assessed as a single property, unless clear evidence demonstrates a need to split”.
She said decisions were being made on a “case-by-case” basis, but that the agency was looking to “clarify the application of case law on serviced offices”. She said the agency would then “consider its approach to the rest of the sector”.
The Chancellor added that by applying a single rating to the building, that falls on the operator, it would mean that the small and micro-businesses working inside the office “face no business rates at all”.
The Fisheries shared office space in Hackney. Founder Hugo Warner said his business had been ‘singled out’ by the Valuation Office Agency Indirect tax threat
However, Mr Warner said that any changes to rates on shared office companies would ultimately be passed on to the renters of flexible office space. “Indirectly, it would be a tax on small and microbusinesses,” he said.
He also warned that many shared office providers risked being caught in the Government’s new “high-value” multiplier for business rates, which will hit businesses with a rateable value of over £500,000. It has been branded a new “super tax” by critics, although the Government has insisted just 1pc of buildings will be affected.
Story ContinuesColliers accused the VOA of a “new bid to raise extra revenue”. Mr Webber said if the agency was successful, the Government could consider “rolling this damaging policy out against the serviced office sector more widely”.
He added: “This result would be a massive hit to providers of flex space, to small businesses, and to the economy as a whole.”
Last week, 60 office operators – with 27,000 tenants – wrote to the Chancellor warning that a wholesale change would pose an “existential threat” to the sector.
A spokesman for the VOA said: “Developments in case law have meant that we have had to review the way serviced offices are assessed. As a result, many may now need to be treated as a single property rather than individual units, depending on their contractual arrangements.
“We understand this could have a financial impact on operators and we are engaging with industry representatives to discuss our approach. However, we are obliged to apply the law based on the facts in each individual case.”
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