Summary: Empty property rates turn up the financial heat on owners of empty property. It is therefore not surprising that property owners try to find ways to mitigate their liability. These mitigation schemes can be controversial, however, landlords will be pleased to read that in certain circumstances they are effective and can bring relief.

The owner of an empty commercial property has 3 months to find an occupier, without having to pay rates as a non-occupying owner. Once an occupier moves in, it becomes liable to pay rates instead of the owner. But to benefit the owner, the occupier must occupy for at least 6 weeks. If the occupation is less than 6 weeks, it does not count. If it lasts 6 weeks or more the owner will have a further 3 month holiday in which to find a new occupier when the premises next become unoccupied.

Principled Offsite Logistics Limited (POLL)  contracted with clients to arrange for the storage of items in unoccupied premises, such storage counting as occupation sufficient (if lasting 6 weeks plus) to entitle the owner to another 3 month rates holiday. POLL’s fees were percentages of the business rates saved by their clients.

Rateable occupation has to have the characteristics of being actual, exclusive, not too transient and beneficial.

Local authorities, who collect and may be entitled to retain, business rates challenged the POLL arrangements saying that the occupation by storage of papers in otherwise empty premises was not beneficial. The dispute was referred to the Administrative Court as a judicial review.

Last week, a High Court judge ruled that the occupation itself was of value to the occupier and accordingly it was beneficial. It followed that the storage use itself was sufficient (if for 6 weeks or more) to entitle the owner to a new 3 month holiday.

In other words, the POLL method for empty property rates mitigation worked.

There is a possibility that the billing authority will seek to appeal this decision to the Court of Appeal. In November 2018 the Court of Appeal is due to hear an appeal in a test case on a different mitigation product.

However, for the time being, owners of empty property that would otherwise be rateable will be pleased that this High Court decision has taken off some of the heat from this tax.

Source: R on the Application of Principled Offsite Logistics Limited and Trafford Borough Council and others [2018] EWHC 1687 (Admin) Kerr J