Summary
Intermittent occupation schemes may generate a further exemption from empty-property rates where the occupation satisfies the ordinary rating principles.
The Ramsay approach requires the court to identify the statutory purpose, ascertain the relevant class of facts and apply the legislation realistically to the scheme as a whole. That approach does not invalidate every arrangement designed to obtain a tax advantage. The statutory purpose of the empty-rates regime is nuanced. It includes encouraging reoccupation, supporting owners of empty properties and maintaining a workable system.
For rateable occupation, the four Laing ingredients remain applicable. Benefit may consist in the occupation itself and need not arise independently of the resulting rates exemption. No additional requirement of productive or commercial use should be introduced.
Factual background
The City of London brought a debt claim against 48th Street Holding Limited for unpaid non-domestic rates and sought declaratory relief against both defendants. The claim concerned premises operated under an intermittent rate-mitigation scheme provided by Principled Offsite Logistics Limited.
After an initial three-month exemption, the scheme involved a six-week lease, the placement of boxes in the premises and a subsequent further exemption period. The parties agreed that the transactions and leases were genuine, that the boxes served no purpose other than rate mitigation, and that the scheme was materially the same as that upheld in R (POLL) v Trafford Council.
The central questions were whether the scheme was defeated by the purposive approach in Ramsay and Hurstwood, and whether the boxes created rateable occupation under the ordinary rating principles.
Held
- Outcome. The claim was dismissed. The rate-mitigation scheme was effective, and the claimant was not entitled to the sums claimed or the declarations sought.
- Purposive construction. The approach in Ramsay, as explained in Hurstwood, required identification of the statutory class of facts and realistic application of the legislation to the scheme viewed as a whole. It did not establish an automatic rule against arrangements entered into for tax avoidance. The statutory purpose of the empty-rates regime involved competing considerations, including encouraging reoccupation, allowing limited relief for empty properties and preserving a workable rating system.
- The 2024 Regulations and the consultation material were instructive. They extended the reset period while retaining the ordinary concept of occupation. That legislative choice supported the conclusion that minimal occupation schemes had not been rendered ineffective under the 2008 Regulations.
- Rateable occupation. The four ingredients identified in John Laing remained the applicable test: actual occupation, exclusivity for the possessor’s purposes, possession of value or benefit, and possession that was not too transient. The benefit could be the occupancy itself. It did not have to be an independent commercial benefit, and it could be realised when the next exemption period was triggered.
- The placing of the boxes manifested POLL’s intention to occupy. The occupation was for the purpose of its business, namely providing rate-mitigation services. Introducing a further requirement of productive use or an independent purpose would create uncertainty and undermine coherence in the rating system.
- The court followed the approach in POLL v Trafford. As a High Court judge, the court would in any event follow a decision of co-ordinate jurisdiction unless convinced that it was wrong or there was a powerful reason to depart from it. Neither threshold was met.
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
First-instance decision. The judgment records no prior appellate decision in the same proceedings.
Key cases cited
11 authorities cited.
- Hurstwood Properties (A) Ltd and others v Rossendale Borough Council and another [2021] UKSC 16
- S Franses Ltd v The Cavendish Hotel (London) Ltd [2018] UKSC 62
- Willers v Joyce (No 2) [2016] UKSC 44
- WT Ramsay Ltd v Inland Revenue Comrs [1982] AC 300
- The Commissioners For HMRC v Altrad Services Limited & Anor [2024] EWCA Civ 720
- The Secretary of State for Health And Social Care On Behalf of Public Health England, R (On the Application Of) v Harlow District Council [2021] EWHC 909 (Admin)
- R (POLL) v Trafford Council [2018] RA 499
- Secretary of State for Business Innovation And Skills v PAG Management Services Ltd [2015] EWHC 2404 (Ch)
- Makro Properties Ltd [2012] EWHC 2250 (Admin)
- Sunderland CC v Stirling Investment Properties LLP [2013] RA 411
- Huddersfield Police Authority v Watson [1947] KB 842
Sign in to see how the court treated each authority. A free account is enough.
Cases citing this case
Available to signed-in members.