A recent High Court case now provides an opportunity to save business rates by extending empty rates relief.

Anyone holding empty property which cannot be re-let will be familiar with the limitations on claiming relief against business rates. This may not seem like an obvious problem for colleges as they are able to utilise an exemption for 100% relief due to their charitable status. However, it may be an issue in relation to any empty properties held by college joint ventures or subsidiary companies which do not have the benefit of this relief.

Anyone holding empty property which cannot be re-let will be familiar with the limitations on claiming relief against business rates. Presently, commercial property qualifies for 100% relief for the first three months after falling empty (that period is extended to six months in respect of industrial property), but after that business rates are payable in full. However, if the property is occupied again for more than a six week period before falling empty again, then a further six month exemption applies. There appears to be no limit as to how many times this can be done.

In Makro Properties Limited and Another –v- Nuneaton and Bedworth Borough Council ([2012] EWHC 2250) the High Court has dealt with this issue of “intermittent” occupation. In that case, Makro, a large cash and carry wholesaler, occupied premises in Coventry. Following surrender of its lease, it subsequently entered into a licence with its former landlord and stored a few pallets of archived documents at the premises from November 2009 to January 2010. This was paperwork which Makro was obliged by law to retain. It then applied for a further six month rate free period on expiry of the licence. The Local Authority refused to grant relief and Makro challenged that and won on appeal in the High Court.

The court held that even though Makro had only occupied 0.2% of the floor space of the premises in this way, that was sufficient to attract rating liability. Makro could show that storage amounted to actual occupation which was exclusive to them and it was also of value to them. Their intention was to incur liability for rates for a short period so as to avoid a longer period of liability.

This case is a signal to anyone with a continuing rates liability on empty property to review again whether they can implement a cost effective scheme to minimise their rates liability. Even slight use of the property, as in this case, may now be sufficient to defeat any refusal by a Local Authority to grant empty rates relief each time the property falls empty after a period of intermittent occupation. It now seems that business ratepayers can organise their affairs so as to mitigate rates payable, including using schemes for intermittent occupation in order to do so.