I provided some of the data used in this article (via FOI-request, used at sqwyre.com).<p>The scale of the number of the hereditaments (taxable units) is remarkable and overloads local tax authorities. We're talking thousands, with regular tenant changes. Even in central London, there are only a handful of municipal staff to deal with all businesses.<p>What you end up with is equivalent to a denial-of-service attack against rates authority staff. They're overwhelmed.<p>That's the real risk to communities. If tax relief claims are industrialised, it puts endless pressure on the services those taxes were supposed to pay for. These are local taxes, so that's libraries, community centres, road maintenance, etc.<p>WeWork may not be a tech company when it comes to what they're selling, but it is when it comes to how they deal with tax.
This is a massively complicated and nuanced issue that has kicked around the Supreme Court in the UK.<p>Here's the game:<p>1) There are taxes levied on business users of commercial office property in the UK.<p>2) Independent small businesses may apply for tax relief if they rent a space that has a rateable value of less than £15,000. (1)<p>3) The intention of this relief was to provide small business users with a fighting chance to be able to afford office space.<p>4) The "total rateable" value" of a massive open coworking space is obviously higher than £15,000 but if you're a business renting 2 desks maybe you should qualify for the small business relief?<p>5) Coworking landlords figured out that they could qualify for the tax breaks THEMSELVES if they cut their own properties into dozens (or hundreds) of small plots or pieces called hereditaments.<p>6) Then in effect you have these hundreds of hereditaments claiming the small business tax and collecting rent from a small business.<p>WeWork is a slightly worse abuser of the game played by virtually all coworking operators in the UK.<p>The "coworking" lobby has published a study outlining their view (1).<p>At the core Her Majesty's Revenue and Customs set up a system that didn't count on the inevitable "enterprise" player paying tax attorneys to abuse them, and the two sides should probably sit down and sort out something reasonable.<p>But instead they're suing eachother to oblivion and employing armies of attorneys :).<p>(1) <a href="https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief" rel="nofollow">https://www.gov.uk/apply-for-business-rate-relief/small-busi...</a><p>(2) <a href="https://lep.london/sites/default/files/The%20affordability%20crisis%20-%20business%20rates%20aren%27t%20working%20for%20london%27s%20open%20workspaces.pdf" rel="nofollow">https://lep.london/sites/default/files/The%20affordability%2...</a>
Any company with local revenue of over $100 million and world wide revenue of nearly a billion should just not be eligible for tax breaks. It's really just that simple.<p>Frankly just remove tax breaks completely and make the whole system simpler and cheaper.
My attempt to read this potentially important article on my iPhone X was murdered by four successive layers of popup screens asking for cookie consent, then a subscription, then 2 advertisements.
WeWork remains woefully insecure [1] -- IP is likely leaking out of it like a sieve -- and with a real-estate structure that's positioned as a too-big-too-fail [2], what could possibly go wrong...<p>[1] The Cyber-Insecurity of WeWork – Shared Offices and Cracking WiFi with Weak WPA2 Passwords<p><a href="https://www.digitaloperatives.com/2018/10/10/the-cyber-insecurity-of-wework-shared-offices-and-cracking-wifi-with-weak-wpa2-passwords/" rel="nofollow">https://www.digitaloperatives.com/2018/10/10/the-cyber-insec...</a><p>[2] The CBINSIGHTS research report (WeWork strategy teardown)...<p>"WeWork’s $47 Billion Dream: The Lavishly Funded Startup That Could Disrupt Commercial Real Estate"<p><a href="https://www.cbinsights.com/research/report/wework-strategy-teardown/" rel="nofollow">https://www.cbinsights.com/research/report/wework-strategy-t...</a>
This reminds me of when I worked overseas for Lucent; they hired an accountant who tried to file such that they would get a tax deduction that was supposed to go to the employee. Fortunately IRS saw through that shenanigan.
In return for offering tenants flexible month to month office space at heavily discounted rent, WeWork get’s the business tax break. I don’t see any reason for outrage.