Business rates avoidance – boxes in empty premises

The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings Ltd and another [2026] EWCA Civ 970.

For many years, so-called “box-shifting” arrangements have been a familiar feature of the business rates avoidance landscape.

Schemes are operated by the landlords themselves, or by firms who exist only to operate avoidance schemes. The business of business rates avoidance has been good.

Business rates avoidance schemes

These schemes provided commercial property owners a way to reduce exposure to empty rates by placing boxes containing redundant or worthless items in otherwise empty premises for six-week periods (13 weeks since the 2024 legislation change).

The occupation was intended to reset the statutory empty-property exemption, producing alternating periods of occupation and rates-free vacancy.

Principled Offsite Logistics Ltd (POLL)

Principled Offsite Logistics Ltd (POLL) had previously been successful in a case with Trafford Council in 2018 and had advertised their services as “the gold standard” in rates mitigation.

POLL, to their credit, admitted that the boxes served no commercial purpose beyond securing the claimed rates saving, but that the legal arrangements were not a sham.

This, and later cases at the High Court, gave legitimacy to these schemes and, as a result, they proliferated on an unprecedented scale.

Ramsay Principle

In 2021, the Supreme Court, in its decision in Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021], accepted that the Ramsay Principle applied to a business rates case for the first time. The Ramsay Principle is a ‘rule’ of purposive interpretation.

City of London Corporation proceedings

The City of London sought to test the scope of this ‘rule’ and originally brought proceedings against 48th Street Holdings Ltd and Principled Offsite Logistics Ltd (POLL) in 2025 concerning non-domestic rates at premises in 2 America Square.

The City failed to win its case at the High Court and subsequently appealed that decision. The appeal was allowed unanimously on 29 July 2026.

City of London Corporation appeal

David Forsdick KC who was assisted by Jacqueline Lean KC represented the City in this matter and they advanced two connected arguments:

• Ramsay/statutory construction: viewed realistically and as a whole, the contrived occupation should not engage the statutory reset because its sole purpose was to obtain the exemption
• Beneficial occupation: the occupation did not satisfy the established ingredients of rateable occupation, because its only claimed benefit was the rates exemption itself, creating a circularity - the benefit depended on the exemption, while the exemption depended on qualifying occupation

The Court of Appeal concluded at [83]:

“…I would allow the appeal and overrule POLL v Trafford. Section 45(1) of the 1988 Act and regulations 4(a) and (b) and 5 of the 2008 Regulations do not have the effect that the placement of items in an otherwise unoccupied hereditament amounts to occupation where the sole aim of doing so is to generate occupation for the purposes of those provisions, there is no commercial or business purpose save for rate mitigation, and the putative occupation is “beneficial” only due to the claimed rate mitigation benefits”

To put this another way, the court reasoned that, on a realistic evaluation of the arrangements, the short-lived placement of valueless boxes solely to trigger the rates exemption did not amount to the beneficial occupation required by the rating legislation.

This judgment was limited to what Lady Justice Falk described in paragraph (82) of the judgment as “pure rates mitigation schemes”, rejecting the proposition that a benefit manufactured wholly by the statutory exemption can itself establish the occupation needed to obtain that exemption.

The further impact of the decision

How this decision might apply to other avoidance schemes will need to be tested.

However, the court provided an indication of how they might consider other schemes when Lady Justice Falk commented at paragraph (82),

“It is a well-established part of the Ramsay principle that a commercially irrelevant contingency or condition included in a scheme in order to secure a fiscal advantage can be ignored”.

On the face of it this would appear to put avoidance schemes, where some minor ancillary benefit is claimed, at significant risk of being found ineffective if they come before a court.

POLL previously claimed more than £500 million in savings for clients, while the City estimates conservatively, that this scheme and variants caused approximately £35 million per year in lost revenue.

The wider financial significance of this decision could, therefore, be substantial at a time when local authorities are facing up to the prospect of cutting essential services.

There remains a strong and valid case for Government to re-examine the application of empty rates and whether they encourage or stifle investment and growth as part of wider business rate reforms.

Neither does this decision remove the need for a General Anti Avoidance Regulation (GAAR) to deter more creative avoidance schemes emerging in the future.

In the interim and, subject to an application for permission to appeal to the Supreme Court being agreed, Billing Authorities appear to have a decision that deters avoidance and assists the Government’s much-repeated aim of using empty property rates as a tool to encourage landlords to bring property back into use.