Possession under a rates mitigation scheme is possession of value and amounts to beneficial occupation of property for rates purposes.
The High Court has considered this issue approving a rates mitigation scheme in Mayor and Commonality and Citizens of the City of London v 48th Street Holding Ltd & Anor [2025] EWHC 1130 (KB).
Rates are imposed on the basis of occupation of a hereditament and, since 2008, ownership of specific hereditaments which have been unoccupied for three months. If a property is occupied for more than six weeks and then becomes unoccupied once more a fresh three-month exemption period is triggered.
The case concerned the several floors at 2 America Square London EC3, of which 48SHL was the leasehold proprietor. COL was the local authority for the building and billing authority with respect to non-domestic rates under the Local Government Finance Act 1988. POLL provided the rate mitigation scheme for the building.
On expiry of the three-month exemption period POLL would grant a lease of the premises and place there boxes and their contents, claiming to be in occupation. Contemporaneously with the grant of the lease, a break notice would be served, terminating the lease six weeks later when the boxes would be removed and 48SHL would claim a further three-month extension.
The scheme reduced 48SHL’s liability for unoccupied rates by 67% and POLL received a share of saving achieved. Such a scheme was found to be effective in R (POLL) v Trafford Council [2018] RA 499.
Was the scheme effective to generate repeating three-month periods of exemption from empty rates? COL claimed that POLL v Trafford was wrongly decided because (i) it failed to have regard to the anti-avoidance purpose of the legislation and (ii) the third of the four ingredients required for beneficial occupation as set out in John Laing v Kingswood [1948] 1 KB 344 – actual occupation; exclusive for the possessor’s purposes; of some benefit to the possessor; and not for too transient a period – was missing. The sole benefit to POLL of its occupation of the premises was the share of savings from the rate mitigation scheme.
The High Court decided that while directed at bringing unoccupied properties back into use the empty rates scheme also envisaged providing scope for ongoing support so leaving the door open for rate mitigation schemes. The judge agreed with the conclusions in Poll v Trafford that possession of value to the possessor was present where the value was the occupancy itself. The rate mitigation scheme was effective.
Louise Clark is a property law consultant
