Empty Property Rates Mitigation
R (Principled Offsite Logistics Limited) v Trafford Council  EWHC 1687 (Admin)
In an important decision for those holding empty property and subject to a non-domestic rates liability, the High Court has ruled that the storage of goods is sufficient to constitute beneficial occupation.
This is an important case where the judge was invited to review Makro Properties Ltd v Nuneaton & Bedworth BC  EWHC 2250 (Admin) and other case law to determine if storage for the purposes of rates mitigation could establish rateable occupation or whether there had to be an independent business purpose.
In this case leases were established with landlords of vacant commercial properties. Goods were stored in these properties for a period of at least 43 days, on vacation empty rates relief of three or six months was triggered. A fee was then charged depending on the level of rates saved by the landlord.
The principal point of contention was whether such arrangements could constitute beneficial occupation (a requirement for the occupation to be rateable) when the purpose of the occupation was rates mitigation. The Council considered that there was no ‘value’ to the occupation when the placing of goods within a property was secondary to the objective of rates mitigation; the rates relief being received after the occupation had ceased.
The Hon Mr Justice Kerr appreciated that there was a need for the substantive issue to be determined. He also identified that there was a lack of clarity over this issue from the earlier authorities.
By interpreting the words “occupation” and “occupy” in the context of their ordinary English meaning, the Court found that the beneficial occupation test could be satisfied where the value or benefit to the occupier was the occupation itself. There is no requirement for an additional purpose or motive beyond that occupation. So long as there is sufficient intention to occupy for a reward, the consideration of any further commercial or other purpose is irrelevant. Specifically the Hon Mr Justice Kerr said that it was important to guard against any moral dimension in the search for the nature of occupation that is “beneficial”.
Local authorities are becoming more aggressive in their interrogation of rates mitigation schemes as they retain and become more dependant on the non-domestic rates that they collect. We are seeing an increase in the number of challenges by Local Authorities. Councils can challenge each occupation on the facts of each case and it is crucial that occupations are arranged on a clear understanding of the law.
The case can be viewed here: http://www.bailii.org/ew/cases/EWHC/Admin/2018/1687.html