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What is dark fibre business rates relief and how can telecoms providers apply for it?

As more organisations look to a variety of ways to stay connected, there has been an increase over the years in demand for dark fibre and how it can benefit businesses moving forward. In April 2017, the Government introduced a five-year holiday period on business rates for new fibre optic broadband infrastructure (FTTP). And, as a result of Covid-19, this break was extended for another year until 1st April 2023. So, what do business leaders have to consider, and how do they claim rates relief before the deadline? We questioned Phil Ray, Director of business rates at Altus Group, to provide this guidance…

Phil, could you summarise what dark fibre is?

Generally, dark fibre is treated as network under construction and therefore isn’t rateable. It’s usual to accept the date that the fibre is lit as evidence of the existence of a rateable network, and this is normally taken as the effective date for such assessment.

However, the strict approach is that any fibre connection that’s completed and capable of being lit is, in theory, capable of being liable for tax.

As a rule of thumb, if a person owns or leases dark (unlit) fibre from a provider and lights it themselves, they will be the rateable occupier.

What is the significance with 1st April 2017 in relation to dark fibre?

The UK Government introduced a five-year holiday period on business rates for all new fibre optic broadband infrastructure (FTTP) that was created from 1st April 2017 onwards. This should expire on 1st April 2022, however, due to Covid-19, the deadline has been extended until the same date and month in 2023.

It’s worth noting that this relief will not apply to networks that existed at that date (April 2017), regardless of whether those fibres were in use (‘lit fibre’) or if they existed, but remained unused, also known as dark fibre. The reason for this is that the Government wants to encourage the installation of as much network cabling as possible so that we’re ready for the gigabit roll-out and are equipped for full fibre coverage throughout the UK.

How do experts, such as Altus Group, help providers understand what dark fibre relief rate they may be entitled to?

We would always want to check, as ratings advisors, that what was in your assessment from your valuations officer, is correct in the first place. In our experience, we’ve found several errors that have impacted the rate payer in the past and, as a result of our investigation, we’ve been able to capture these, help them apply for refunds and reduce ongoing liability.

Does this type of ‘fibre tax’ only impact the telecoms sector?

Anybody who has rate liability has to have it checked, so I’d recommend getting a specialist to look into this for you. We’ve got vast experience in this area and work on a performance-related basis too, so we don’t charge unless our support results in demonstrable savings and rates. It costs nothing to find out, and if your liability is reduced back to 1st April 2017, you’re entitled to all backdated refunds.

And finally, do you have any further advice for our industry when it comes to dark fibre relief?

Business rates are phenomenally complex, and each Government has, in some way, been trying to get rid of it since 1601 – so you can imagine how many changes have been undertaken. Providers should always request proper advice from trusted specialists who are able to answer any questions without fear of it being ‘on-the-clock’.

If you’re concerned about your relief rates, get in touch with Phil Ray at Altus Expert Services on: phil.ray@altusgroup.com. We’re also on hand to help in a legal capacity, speak to us on 01256 856 888.

 

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