High Court ruling on rate schemes

In the recent case of The Mayor and Commonality and Citizens of the City of London v 48th Street Holding Limited & Anor, decided on 15 May 2025, the High Court addressed significant issues surrounding the legal framework of non-domestic property rates and the complexities introduced by rate mitigation schemes. The judgment, delivered by Deputy High Court Judge Charles Bagot KC, focused on whether such schemes effectively generate the necessary legal occupation to qualify for exemptions from unoccupied rates.

The dispute at the heart of this case centres on a debt claim brought by the City of London, the “Claimant”, against 48th Street Holding Limited and Principled Offsite Logistics Limited, the “Defendants”. The Claimant sought to recover unpaid non-domestic rates amounting to £111,475.30, in addition to interest, for an office building located in London. This claim was based on the interpretation of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 and the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008.

From the mid-1960s, local authorities have had extended powers regarding the assessment and collection of rates on unoccupied properties. Following the 2007 amendments, it became clear that property owners would start to incur rates on their vacant properties after three months of vacancy, with regulatory measures shaping how exemptions from these rates were handled.

The case explores the Rate Mitigation Scheme employed by the Defendants, in which unoccupied properties were supposedly brought into temporary occupation to prolong the period of exemption from rates. This legal tactic aimed to limit costs by meeting the requirements outlined in the existing ratings regulations, allowing property owners to benefit financially while the properties remained vacant.

Under this particular arrangement, the occupier, in this instance, Principled Offsite Logistics Limited, would place boxes of goods in the vacant premises as a temporary measure, thus claiming occupation status—and subsequently a new three-month period of rate exemptions. Here, the court had to consider whether such an arrangement constituted valid legal occupation under the relevant regulatory framework.

The Claimant argued that such schemes fundamentally misinterpreted the intentions of the legislation, which was designed to dissuade property owners from using loopholes to secure rate exemptions rather than bringing their properties back into active use. It was asserted that the mere placement of items was insufficient for defining legitimate occupation and that the underlying rationale of revenue generation should come first.

The Defendants contended that their actions, though designed to mitigate rates, did not violate the terms of the law. They relied on precedents from prior cases, notably POLL v Trafford, which had been previously examined in favour of similar schemes, suggesting that the RMS should likewise be upheld.

After comprehensively evaluating the claims and counterclaims, Judge Bagot dismissed the Claimant's assertions. The judgment concluded that the RMS employed by the Defendants did constitute sufficient occupation in line with established legal definitions. The decision reaffirmed that occupation benefiting from rates exemptions adhered to the structure set forth by legislation, which gives local authorities discretionary powers to define occupation based on the physical presence and intent.

Consequently, the court ruled against the Claimant's seeking recovery of the claimed rates, emphasising the essential role of legislative intent in shaping the practical application of property laws. The ruling ultimately signifies a nuanced approach to the interplay between property ownership, occupancy, and financial liability under UK law, leaving the door open for similar rate mitigation schemes to operate effectively within the established regulatory framework.

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