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Good news for large retail businesses as the Expanded Retail Discount 2020-21 is declared not to constitute "State aid"

07 April 2020
DWF | Retail
It has been announced that the "Expanded Retail Discount" initiative shall be awarded on a 'no aid' basis, following discussions with the European Commission, which is good news for larger retailers who had been concerned that the new business rates relief measure announced to mitigate the impact of the Coronavirus lockdown may have been subject to a €800,000 cap. 

The Expanded Retail Discount 2020-2021

The Expanded Retail Discount is an initiative announced on 11 March 2020 by the Chancellor of the Exchequer Rishi Sunak MP to extend the 100% Business Rates Retail Discount for the 2020-2021 financial year to include occupied properties that are wholly or mainly used as:

(a) Shops;
(b) Restaurants, bars and cafes; 
(c) Cinemas and music venues;
(d) Hotels and self-catering accommodation; and
(e) Leisure venues including sports clubs, gyms and tourist attractions such as Stately Homes.

In England the scheme shall be administered by Local Authorities using their discretionary relief powers.   

There shall be no need for businesses to submit an application to obtain the relief, as stated on the Government's advisory website.  Rather the Local Authority shall determine which businesses shall benefit from the relief.

No ceiling on level of relief available

In the initial guidance circulated to Chief Finance Officers of Local Authorities, the Government stated that the measure may constitute State aid, hence it would seek approval from the European Commission through the notification process.

This led to speculation that the business rates relief would be limited to a maximum of €800,000 regardless of the size of the business (this being the maximum threshold under 3.1 of the new Temporary Framework issued by the European Commission).

However updated guidance to Local Authorities published on 2 April 2020 states that, following informal discussions with the European Commission, the UK considers the Expanded Retail Discount 2020/21 to be a "no aid" measure.  

This means that there is no ceiling attached to the Expanded Retail Discount, which means it is uncapped.  Therefore businesses with larger business rate liabilities will be able to benefit from this in full. 

DWF has a wealth of experience in commercial law, tax and State aid. We can help public bodies putting in place schemes and businesses wanting to ensure they are correctly considered for the relief.

For more information please contact one of our experts below.

View more insights on our COVID-19 Hub 

 

Further Reading

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