A&P68 Limited v City of Bradford: The test for ownership in business rates avoidance schemes

The High Court's recent decision in A&P68 Limited v City of Bradford Metropolitan District Council [2026] EWHC 27 (Admin) provides important clarification on determining ownership of unoccupied hereditaments for business rates purposes, particularly in cases involving rate mitigation schemes.

A&P68 Limited owned a former bank premises in Keighley which became vacant in 2022. To mitigate non-domestic rates liability, the company instructed Verity Commercial Services, which established two special purpose vehicles: Room for Faith Limited (incorporated in England and Wales) and Local Faith Limited (incorporated in Hong Kong). A five-year lease was granted to RFFL for £1 annual rent, which then sub-let to LFL. The intention was that LFL would use the property for religious worship, thereby engaging the exemption under paragraph 11 of Schedule 5 to the Local Government Finance Act 1988.

The scheme failed because no certificate under the Places of Worship Registration Act 1855 was obtained. Bradford Metropolitan District Council subsequently sought a liability order against A&P68 Limited for unpaid rates totalling £14,348.90.

The legal framework

Section 45(1) of the 1988 Act imposes liability for non-domestic rates on unoccupied hereditaments. The "owner" is defined in section 65(1) as "the person entitled to possession". The central issue was whether this definition applied to LFL, as sub-tenant, or remained with A&P68 Limited as freeholder.

The Supreme Court's decision in Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021] UKSC 16 established a purposive approach to interpretation. That case concerned schemes where special purpose vehicles were granted short leases before being placed into liquidation or dissolved, with the sole purpose of avoiding rates liability.

The single test approach

Mrs Justice O'Farrell confirmed that sections 45(1)(b) and 65(1) establish a single, purposive test for determining who is entitled to possession. The critical question is whether the person has a real and practical entitlement to possession, carrying the ability either to occupy the property or confer occupation rights on others.

This approach was subsequently endorsed by the Court of Appeal in The King (on the application of Emeraldshaw Limited) v Sheffield Magistrates' Court [2025] EWCA Civ 1601, which clarified that the owner is the person with immediate legal right to actual physical possession, unless they have no real or practical ability to exercise that right and were only granted it to avoid rates liability.

Application to the facts

District Judge Boyd found that LFL lacked real and practical ability to occupy the hereditament or put anyone into occupation. The property showed no signs of use as a place of worship, had never appeared on LFL's website, and retained its planning designation as a bank. Crucially, no evidence was produced from any LFL officer, and photographs and prayer schedules relied upon carried no probative weight.

The judge concluded that LFL was a company upon which legal rights were conferred solely for rates avoidance. Real and practical ability to control occupation remained with A&P68 Limited throughout the relevant period.

The High Court dismissed the appeal, rejecting arguments that this was a "normal" case distinguishable from Rossendale. The absence of any genuine business activity by LFL connected to the property, combined with the undisputed purpose of avoiding rates liability, placed it squarely within the Rossendale principles.

The decision reinforces that courts will look beyond formal legal structures to identify who genuinely controls whether property is brought back into use, ensuring the statutory purpose of incentivising occupation is not defeated by artificial arrangements.

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