A landmark ruling on ‘beneficial occupation’ one of the four ingredients which must be determined when deciding rateable occupation for business rates purposes was handed down by the High Court on 6^th July 2018 and is likely to have a significant negative impact on local authorities.

Four ingredients of rateable occupation

John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 at p350 (per Tucker LJ) established the 4 ingredients:

Actual occupation – boxes are in the building

Exclusive use – the ratepayer is the individual/ business claiming occupation

Transience – 42 days is considered a long enough period to claim occupation

Beneficial – occupation must be of some benefit or value to the rate payer

The High Court ruling

1. (on the application of Principled Offsite Logistics Ltd) v Trafford Council [2018] EWHC 1687 (Admin) (‘POLL’)

The ruling, found in favour of Principled Offsite Logistics Ltd (POLL), a company who state on their website that they

“established with the objective of providing short term and deep storage solutions for clients whilst assisting landlords, agents and asset managers to reduce their costs”

Summary of case:

The POLL case clarifies the law, determining that beneficial occupation, the third ingredient/element of 'rateable occupation' articulated in Laing, does not require the putative occupier/ratepayer to hold a purpose or motive beyond that of the occupation itself. Occupation can be for its own sake. So long as there is a volition to occupy - the exercise of the will to occupy, there is no wider purpose or motive that must be held. An intention to occupy for reward is sufficient, notwithstanding that the benefit may derive from a tax avoidance scheme.

The industry reaction

The general feeling amongst LACEF members is that tax avoidance has been legalised and that local authorities will continue to see such methods and schemes used by businesses to circumnavigate the system to benefit repeatedly from the ’42-day rule’.

In times where we continue to see budgets squeezed and frontline services suffering we hope that the ruling is further challenged in the Supreme Court.

Several cases in the magistrate’s court have been stayed pending the outcome of this case and this judgment will now influence any further challenges of this nature.

You can read the full judgment here:

Webinar – business rates avoidance

Excel held a webinar on business rates avoidance, presented by Julie Smethurst, Revenues Manager for Preston and Lancaster and Laura Anne Smith, Business Development Manager for Excel. If you would like to listen to the recording, you do so from this link.