High Court Upholds Legality of Rates Mitigation Scheme in Landmark Ruling

In a landmark decision handed down by the High Court, the City of London Corporation (CoL) has lost its bid to reclaim over £111,000 in unpaid business rates from 48th Street Holding Ltd and Principled Offsite Logistics Ltd (POLL), in a case that solidifies an approach landlords can undertake to manage empty commercial properties.

At the heart of the case was a rates mitigation scheme for empty property, temporarily occupying vacant office floors with boxes for six-week intervals (current legislation has increased this period to 13 weeks). This brief period of occupation triggered a three-month exemption from empty property rates. The cycle was repeated, significantly reducing the rates liability for the landlord, 48th Street Holding Ltd.

CoL argued the scheme was purely artificial and should be invalidated and treated as tax avoidance. However, the High Court found the occupation in this case to be lawful, genuine, and consistent with established case law – particularly a previous successful case involving one of the defendants: POLL (POLL v Trafford (2018)). The judge emphasised that the benefit derived from the occupation, even if purely for rate savings, was sufficient to meet legal definitions of rateable occupation.

This ruling will provide significant relief for landlords struggling with vacant commercial space. It confirms that, under current law, structured rates mitigation schemes remain lawful, even when their sole purpose is financial relief.

While the government has tightened the rules in England – extending the qualifying occupation period to 13 weeks from April 2024 – it has not outlawed such schemes. Until further legislative change, landlords retain a lawful and practical method to reduce the financial burden of holding empty property in a challenging commercial market.