In the recent case of Schroder Exempt Property Unit Trust v Birmingham City Council, the High Court has confirmed that it is the landlord who is liable to pay business rates for an empty property following disclaimer of the lease by the tenant’s liquidator.
Under the Local Government Finance Act 1988, the person “entitled to possession of the property” is liable for rates.
The court held that, following disclaimer, the landlord had an immediate right to possession even though it had not actually taken possession of the property.
The landlord is therefore liable for business rates if the tenant vacates following disclaimer (and following the expiry of any empty-rates exemption period). To the extent that the property remains occupied during the liquidation, rates will be payable as an expense of the liquidation.
The landlord may be able to obtain reimbursement of any rates payments from any guarantor, or authorised guarantor, of the tenant.