In the Court of Appeal’s recent decision in The Mayor and Commonalty and Citizens of the City of London v (1) 48th Street Holdings Limited (2) Principled Offsite Logistics Limited [2026] EWCA Civ 970 the efficacy of a scheme regularly deployed to avoid liability for non-domestic rates (“NDR”) came unstuck.
Briefly, the owners of unoccupied commercial premises are liable for NDR (otherwise known as business rates) even when they stand empty (subject to certain relief). The Second Respondent, Principled Offsite Logistics Limited (“POLL”), was the promoter of a scheme that sought to reduce an owner’s liability for NDR. That scheme depended upon the operation of certain provisions of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 (“the 2008 Regs”) which provides, subject to regulation 5, relief from liability to NDR where commercial property has been unoccupied for a continuous period not exceeding 3 months (regulation 4(a)) or, in respect of certain industrial premises, a continuous period not exceeding 6 months (regulation 4(b)).
The ‘POLL scheme’ involved the placing of boxes in unoccupied commercial property for the purposes of claiming that it was the rateable occupier of the property for the duration of its ‘occupation’ (“the Box Schemes”). Rateable occupation, which creates liability for NDR under section 43 of the Local Government Finance Act (“the LGFA”), requires such occupation to be (1) actual occupation, (2) exclusive occupation for the purposes of the possessor, (3) of some value to the possessor (ie beneficial), and (4) not for too transient a period, John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 (“Laing”). After a minimum prescribed period of occupation POLL would remove the boxes, thus triggering a period of empty property relief which the owner would enjoy. The scheme would then be repeated cyclically until the owner could transfer liability to a more permanent tenant.
A body of case law had become established to the effect that the Box Schemes, despite what might be described as an apparent ‘artificiality’, were successful to achieve the effect of rateable occupation followed by an entitlement to empty property relief upon their removal. Such was the success of this type of scheme that POLL, in this case, stated that its only purpose in placing boxes in the premises was to generate ‘occupation’ for the purposes of then triggering an entitlement to empty property relief. In other words, the Box Scheme in this case had no independent commercial or business purpose besides that of rates mitigation (in some other cases there was a claimed business purpose other than creating circumstances to trigger empty property relief).
At first instance Charles Bagot KC, sitting as a Deputy High Court Judge, following the approach of the High Court in earlier cases, concluded that the Box Scheme was effective. On appeal by The Mayor and Commonalty and Citizens of the City of London (“CoL”) the opportunity was provided for the Court of Appeal to consider whether the principles derived from WT Ramsay Limited v Inland Revenue Commissioners [1982] AC 300 (“Ramsay”) had any application in the context of the POLL scheme. Falk LJ, giving the judgment of the Court, concluded, following the Supreme Court’s decision in Rossendale Borough Council v Hurstwood Properties (A) Ltd [2022] AC 690 (“Rossendale”), which adopted a purposive (Ramsay) approach to the legislation in the context of liability for NDR arising under the ‘unoccupied property’ provisions of the LGFA, that such an approach was also appropriate in the context of section 43 (occupied property) liability and, accordingly, occupation without any purpose other than NDR mitigation was not rateable occupation within the legislative scheme, the result being that there was no period of qualifying occupation that could then trigger an entitlement to empty property relief in this case.
Whilst this decision concerns a scheme in respect of which it was common ground that its only purpose was to mitigate the property owner’s NDR liability, the discussion around beneficial occupation (the third of the Laing criteria) and the lack of commercial or business purpose connected with the storage of boxes will surely be revisited in cases where there is a claimed commercial or business purpose.
At the time of writing, it is not yet known if this decision will be subject to an application to appeal to the Supreme Court.
Rowena regularly appears in matters concerned with liability for NDR in the Magistrates’ Court, on appeal to the High Court and, most recently, in the Court of Appeal in the case of R (on the application of Emeraldshaw Limited) v Sheffield Magistrates’ Court (Respondent) & Sheffield City Council (Interested Party) [2025] EWCA Civ 1601; [2026] 1 WLR 1640.
