Judge grants review to serviced office landlord

In a significant legal development, Hugo Warner, the co-founder of Fisheries London Limited, has received permission to apply for a Judicial Review of a controversial backdated business rates bill that he claims could force his co-working space into insolvency. The Honourable Mrs Justice Lang DBE supported Warner's cause, stating that the “Claimant has raised arguable grounds which merit consideration at a full hearing.” The company faces an additional tax charge of £500,000—which represents a startling 150% increase over rates already paid—prompting fears that the current government is initiating a stealth tax raid on serviced offices with multiple tenants.

Warner believes his workspace has been unfairly targeted with this “illegal” charge dating back to 2023, as it has not faced similar financial penalties like other nearby competitors. According to John Webber, Head of Business Rates at Colliers, who advises the Fisheries, the HMRC Valuation Office (VO) has recently changed its approach by assessing serviced office buildings as a single establishment rather than as separate units. This shift in policy impacts individual tenants, often leading them to lose the ability to claim small business rates relief, thus increasing the operational burden on co-working space providers.

Over the past year, the VO has increasingly categorised these flexible office spaces collectively, placing the responsibility for the entire rates bill on the building operators, a practice that is contrary to industry norms. The aesthetic significance of this case extends beyond the fate of Fisheries; it may set a precedent that could reverberate throughout the serviced office sector. As various stakeholders in the industry express their concerns, Webber remarked, “The VO’s behaviour has been arbitrary, outrageous and often contradictory,” emphasising its failure to adhere to established case law.

As outlined by Chancellor Rachel Reeves in correspondence to Warner’s local MP, the VO has determined that “most serviced offices will need to be assessed as a single property”, though it asserted that decisions would be made on a “case by case basis.” If this approach is deemed effective, it could lead to higher costs being passed down to small and microbusiness tenants who may struggle to manage enhanced financial burdens.

Warner and his advisers view this situation as a potential test case with broader implications for the serviced office sector. “If it is successful, the government could consider rolling this damaging policy out against the serviced office sector more widely,” Webber warned, indicating that the repercussions could have far-reaching effects on providers of flexible workspace and the economy at large. The case is being closely monitored by various industry commentators and stakeholders, who recognise that the outcome may shape the future of shared office environments amid an already challenging economic landscape.

“We are delighted that the Honourable Mrs Justice Lang DBE has granted our client permission to apply for judicial review on all grounds and we will be fighting this unfair tax all the way” said Webber, encapsulating the determination of the Fisheries team in their legal battle against what they perceive as an unreasonable financial demand. With no resolution reached to date, the complexities and stakes involved continue to mount as the case unfolds.