Skip to main content

Cookies

We use cookies to help provide a better website experience for you, as well as to understand how people use our website and to provide relevant advertising.

By clicking "I agree", you'll be letting us use cookies to improve your website experience. To find out more or to change your cookie preferences, click "Manage Cookies".

We value your privacy

Like many other websites, our website uses cookies. Cookies are small files placed on your computer when you visit our site. They serve a number of purposes, including ensuring that certain parts of the website work properly, allowing us to understand which areas of our website are the most popular and allowing us to provide more relevant advertising messages. They don't allow us to identify you specifically and no personal data is gathered about you.

If you'd prefer that cookies weren't placed on your computer when you visit our site, you can use the controls below to allow or disallow different types of cookie. Some cookies are essential for the website to work, so they can't be disallowed.

  • These cookies give us anonymised information on how people use our website. We use these cookies to help us tailor our site to meet the needs of our visitors, for example by making sure our most popular pages are easy to find.

  • These cookies serve a number of purposes, such as allowing you to share our content with your friends and social networks. We also use these cookies to provide targeted advertising, so you may see relevant adverts based on the pages you look at on our website.

  • About
  • News & Insights
  • Careers
  • International
  • ESG
0370 1500 100
Dialog that contains search functionality
Irwin Mitchell Logo
  • Personal
    • Personal
    • Personal Home
    • Personal Injury Claims
      • Personal Injury Claims
      • Personal Injury Claims Home
      • Abuse & Criminal Injury Claims
      • Accidents In Public Places Claims
      • Accident At Work Claims
      • Air, Rail & Maritime Claims
      • Asbestos & Mesothelioma Claims
      • Changing Solicitors During a Personal Injury Claim
      • Group Claims
      • Holiday Accidents & Illness Claims
      • Illness Compensation Claims
      • Industrial Disease Claims
      • Injury Types
      • Military Injury Compensation Claims
      • No Win No Fee Personal Injury Claims
      • Personal Injury Claims In Scotland
      • Personal Injury Information
      • How To Claim Compensation For Personal Injury
      • Product Liability Claims
      • Rehabilitation & Medical Care
      • Road Traffic Accident Claims
      • Serious Injury Claims
      • Who Can Help?
      • Support Services
    • Medical Negligence Claims
      • Medical Negligence Claims
      • Medical Negligence Claims Home
      • Cancer Misdiagnosis Claims
      • Birth Injury Claims
      • Cauda Equina Syndrome Claims
      • Cosmetic Surgery Claims
      • Cerebral Palsy Claims
      • Defective Medical Device Claims
      • Dental Negligence Claims
      • Diabetes Claims
      • Fatal Medical Negligence Claims & Inquests
      • GP Negligence Claims
      • Hospital Negligence Claims
      • What Is Medical Negligence?
      • Meningitis Misdiagnosis Claims
      • Failure To Prevent Suicide Claims
      • Misdiagnosis Claims
      • Ophthalmic Negligence Claims
      • Pregnancy & Gynaecology Injury Claims
      • Sepsis Negligence Claims
      • Shrewsbury & Telford Hospital NHS Trust Maternity Care Claims
      • Stroke Misdiagnosis Claims
      • Surgery Compensation Claims
    • Family Law
      • Family Law
      • Family Law Home
      • Divorce Solicitors
      • Prenuptial & Postnuptial Agreement Solicitors
      • Child Abduction Solicitors
      • Civil Partnership Solicitors
      • LGBT+ Family Law Solicitors
      • Unmarried Couples' Rights
      • Divorce Financial Settlement Solicitors
      • Child Arrangement Orders
      • Family Mediation Lawyers
      • Out Of Court Divorce Solicitors
      • Separation Agreement Solicitors
      • Adoption & Surrogacy Solicitors
      • Counselling
    • Wills, Trusts & Estates
      • Wills, Trusts & Estates
      • Wills, Trusts & Estates Home
      • Estate Planning Solicitors
      • Powers Of Attorney
      • Trusts
      • Will Writing Services
      • Will Disputes & Contentious Probate
    • Conveyancing & Property Solicitors
      • Conveyancing & Property Solicitors
      • Conveyancing & Property Solicitors Home
      • Conveyancing Fees Calculator
      • Buying A Property
      • Selling A Property
      • Remortgage
      • Transfer Of Equity
      • Buy To Let
      • Absentee Landlord & Freeholder Tracing Service
      • Freehold Purchase (Leasehold Enfranchisement) Solicitors
      • Lease Extension Solicitors
      • Conveyancing Guide
      • Our Prices - Residential Conveyancing for properties valued above £500,000
    • Tax
      • Tax
      • Tax Home
      • Business Tax
      • Inheritance Tax
      • International Tax
      • Professional Negligence
      • HMRC Tax Investigations
      • Tax Disputes & Litigation
      • Tax Residence
      • Tax Returns & Compliance
      • Wealth Structuring
    • Probate
      • Probate
      • Probate Home
      • International Probate
      • Probate Sale Conveyancing
      • What Is Probate & How Does It Work?
    • Will, Trust & Estate Disputes
      • Will, Trust & Estate Disputes
      • Will, Trust & Estate Disputes Home
      • Trust Disputes
      • Inheritance Act Claims
      • Contesting A Will
      • Contentious Probate
      • Pre-Death Agreements
      • Professional Negligence
      • Challenging A Lifetime Gift
      • Financial Abuse
      • Statutory Will Disputes
      • Defending A Contested Will
    • Employment Solicitors
      • Employment Solicitors
      • Employment Solicitors Home
      • Employment Contract Solicitors
      • Employment Disputes
      • Dismissal & Redundancy Solicitors
      • Employment Discrimination Solicitors
      • Employment Lawyers for Legal Expenses Insurance
      • Harassment & Bullying At Work Solicitors
      • Parental & Family Friendly Employment Rights
      • Professional Discipline Solicitors
      • Recruitment & Promotion
      • Senior Executive Employment Lawyers
      • Settlement Agreements
      • Whistleblowing Solicitors
    • Elderly Legal Services
    • Protecting Your Rights
      • Protecting Your Rights
      • Protecting Your Rights Home
      • Actions Against The Police
      • Environmental & Planning Law
      • Assessment & Treatment Unit Solicitors
      • Data Protection Breach Claims
      • Education Law
      • Healthcare & Social Services
      • Human Rights
      • Judicial Review
      • Mental Capacity
      • Motoring Offences Legal Advice
      • Professional Regulation & Discipline
      • Dispute Resolution
      • Legal Aid
    • Immigration Solicitors
      • Immigration Solicitors
      • Immigration Solicitors Home
      • British Citizenship & Naturalisation Solicitors
      • EU & EEA Immigration Solicitors
      • Indefinite Leave To Remain Solicitors
      • Spouse Visa Solicitors
      • Innovator Visa
      • Tier 1 Entrepreneur Visa
      • Permanent Residence Solicitors
      • Tier 1 Investor Visa
      • Business Immigration Solicitors
    • Crime & Investigations
      • Crime & Investigations
      • Crime & Investigations Home
      • Crime
      • Fraud & Financial Crime
      • Court Martial Solicitors
      • Motoring Offences Legal Advice
      • Regulatory Investigations & Enforcement
    • Insolvency
      • Insolvency
      • Insolvency Home
      • Business Restructuring & Insolvency
      • Debt Consultancy
      • Insolvency Disputes & Litigation
    • Court Of Protection
      • Court Of Protection
      • Court Of Protection Home
      • Court Of Protection Deputyship
      • Personal Injury Trusts
      • Court Of Protection Problems & Disputes
      • Healthcare and Social Services
      • Frequently Asked Questions
      • Powers Of Attorney
      • Powers Of Attorney Disputes
      • Statutory Wills And Trusts
    • Agriculture & Rural Business
    • Landed Estates
    • Family Offices
  • Wealth Management
    • Wealth Management
    • Wealth Management Home
    • Asset Management For Personal Injury
    • Charity & Philanthropy
    • Estate Planning
    • Ethical & Sustainable Investing
    • Financial Planning
    • Intergenerational Wealth Management
    • Investment Management
    • Retirement Financial Planning
    • Succession Planning
    • Tax Planning
  • Business
    • Business
    • Business Home
    • Sectors
      • Sectors
      • Sectors Home
      • Agriculture & Rural Business
      • Consumer & Retail
      • Education
      • Financial & Professional Services
      • Landed Estates
      • Manufacturing
      • Media & Entertainment
      • Real Estate
      • Sport
      • Technology & Communications
    • Banking & Finance
      • Banking & Finance
      • Banking & Finance Home
      • Corporate Banking
      • Funds
      • Leveraged & Acquisition Finance
      • Real Estate Finance
      • Receivables Finance & Asset Based Lending
    • Business Crime
      • Business Crime
      • Business Crime Home
      • Anti-Bribery & Corruption
      • Asset Tracing & Recovery
      • Cartels & Illegal Price Fixing
      • Cybercrime
      • Dawn Raids
      • Deferred Prosecution Agreements
      • Extradition
      • INTERPOL Red Notices
      • Mutual Legal Assistance
      • Private Prosecution
      • Proceeds Of Crime Act
      • Unexplained Wealth Orders
      • Fraud Lawyers
      • Insider Trading & Market Abuse
      • Corporate Internal Investigations
    • Business Immigration
      • Business Immigration
      • Business Immigration Home
      • Business Visitor Visa
      • Innovator Visa
      • Prevention Of Illegal Working
      • Sole Representative Of An Overseas Business
      • Tier 1 Entrepreneur Visa
      • Tier 1 Investor Visa
      • Tier 2 & 5 Sponsor Licence
      • Tier 2 Visa
      • Tier 4 Sponsor Licence
    • Commercial
      • Commercial
      • Commercial Home
      • Commercial Contracts
      • Competition Law
      • GDPR & Data Protection
      • Information Technology
      • Media & Entertainment
      • Sourcing
      • Licensing
      • Notary Public Solicitors
    • Commercial Litigation & Dispute Resolution
      • Commercial Litigation & Dispute Resolution
      • Commercial Litigation & Dispute Resolution Home
      • Banking & Finance Litigation
      • Business Interruption Insurance Lawyers
      • Contract Disputes
      • Commercial Judicial Review
      • Defamation & Reputation Management
      • International & Cross-Border Disputes
      • Litigation Funding
      • Our Prices - Commercial Debt Recovery
      • Professional Negligence
    • Corporate
      • Corporate
      • Corporate Home
      • Corporate Advisory
      • Equity Capital Markets
      • Mergers & Acquisitions (M&A)
      • Private Equity
    • Costs Team
    • Environmental, Social & Governance
      • Environmental, Social & Governance
      • Environmental, Social & Governance Home
      • Environment
      • Social
      • Governance
      • International
      • ESG Legal Advisory Services
      • Cyber Security
      • Diversity & Inclusion
      • Legislation Library
      • ESG Media Library
      • Sports Sector
      • Manufacturing Sector
      • Real Estate Sector
      • Consumer & Retail Sector
    • Employment Law
      • Employment Law
      • Employment Law Home
      • Business Immigration
      • Employment Contracts, Policies & Procedures
      • Disciplinary & Grievance
      • Employee & Industrial Relations
      • Employment Lawyers for Legal Expenses Insurance
      • Employment Litigation & Dispute Resolution
      • Equality, Diversity & Discrimination
      • Flexible Working Arrangements
      • Health & Safety
      • HR Advice Service - IMhrplus
      • Managing Sickness Absence
      • Pensions
      • Recruitment
      • Restrictive Covenants
      • Restructuring & Redundancy
      • Self Employment, Contractors & Agency Workers
      • Employment Seminars, Training & Updates
      • TUPE
    • In-House Counsel
    • Intellectual Property
      • Intellectual Property
      • Intellectual Property Home
      • Defamation & Reputation Management
      • Copyright Lawyers
      • Design Rights Lawyers
      • Image Rights Lawyers
      • IP Audits
      • Online Marketplace Seller Account Or Listing Suspensions
      • Stopping IP Infringement By Sellers On Online Marketplaces
      • Patent Lawyers
      • Trade Mark Lawyers
      • Trade Secrets Lawyers
    • Legal Helpline
    • Pensions
      • Pensions
      • Pensions Home
      • Employment
      • Managing Death Benefit Trusts
    • Regulatory & Compliance
      • Regulatory & Compliance
      • Regulatory & Compliance Home
      • Road Transport & Operator Compliance
      • GDPR & Data Protection
      • Regulatory Investigations
      • Environment & Safety Regulatory Compliance
      • Financial Services Regulation
    • Real Estate
      • Real Estate
      • Real Estate Home
      • Corporate Occupiers
      • Real Estate Development and Regeneration
      • Construction & Engineering
      • Environmental
      • Real Estate Finance
      • Real Estate Investment
      • Later Living & Care
      • Planning
      • Property Litigation & Real Estate Disputes
      • Real Estate Tax
      • Residential Development
      • Strategic Land
      • Structured Real Estate
    • Restructuring & Insolvency
      • Restructuring & Insolvency
      • Restructuring & Insolvency Home
      • Corporate Insolvency
      • Partnership Insolvency
      • Directors' Duties
      • Restructuring Plans
      • Restructuring
    • Tax
      • Tax
      • Tax Home
      • Corporate Tax
      • Real Estate Tax
      • Tax Investigations
  • People
    • People
    • People Home
    • Search By Name
    • Search By Location
    • Search By Expertise
    • Business Management
  • Offices
    • Offices
    • Offices Home
    • Birmingham
    • Bristol
    • Cambridge
    • Cardiff
    • Chichester
    • Gatwick
    • Glasgow
    • Leeds
    • Liverpool
    • London
    • Manchester
    • Middlesbrough
    • Newbury
    • Newcastle
    • Reading
    • Sheffield
    • Southampton
  • Contact
  • About
  • News & Insights
  • Careers
  • International
  • ESG
Irwin Mitchell Logo
Dialog with Irwin Mitchell phone number
Call us on 0370 1500 100

We're here 24/7, 365 days a year.

  • Home
  • News & Insights
  • Newsletters
  • Property Law Update
  • The only way is ethics (or, high passion in the rates department)

The only way is ethics (or, high passion in the rates department)

R (on the application of Principled Offsite Logistics Ltd) v Trafford Council

Background

As property-owning readers will be only too aware, the fact that a commercial property is vacant does not mean that national non-domestic rates (NNDR) are not payable.

If a commercial property becomes vacant then the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 (2008 Regulations) allow for time-limited reliefs - supposedly to encourage property-owners to ensure their properties do not lie dormant and are brought back into economic use.

The current position is that commercial property, such as a shop or office, is entitled to 100% relief but only for a period of three months. Industrial and warehouse property fares slightly better and is entitled to six months’ relief. After expiry of these respective periods, full NNDR become payable again. There are other reliefs and exclusions - the legislation is complex - but for our purposes these are the principal reliefs.

The problem

Case law establishes that a building must be capable of beneficial occupation in order to be liable to NNDR. It is this principle that many property-owners have turned to in order to relieve themselves of the burden of NNDR, with the result that our industrial cities and towns are blighted by semi-derelict buildings which have been vandalised by their owners to ensure that they are not capable of beneficial occupation following expiry of NNDR relief. Thus, the restriction of empty-rates relief, rather than ensuring an early return of a building to positive economic activity, has resulted in the permanent removal from the economy of many thousands of square meters of commercial and industrial floor space. This was, of course, a completely unpredictable result…

The relief

However, all is not lost for those who wish to keep their property wind and water-tight because the legislation states that if the property-owner can find an occupier for the building within the three or six-month period then that occupier becomes liable for NNDR. But, to benefit the owner, the occupation must last for at least six weeks. If premises are occupied for less than six weeks, the period doesn’t count as an interruption to the emptiness of the building and the owner becomes rateable as a non-occupier at the end of the period of occupation. If the occupation lasts six weeks or more, when it ends the owner will have a further three to six month period of non-rateability in which to find another occupier. So, an owner may seek to avoid rates liability by arranging a series of “six weeks plus” occupations by a tenant, provided not more than three months elapse from the end of one such occupation to the start of the next.

The case

Principled Offsite Logistics Ltd v Trafford Council reached the High Court in May 2018 and the judgment was handed down by Mr Justice Kerr in July. His judgment starts on an unpromising note for the reader seeking excitement in rating law. He said: “to the uninitiated, this might seem like a dry enough question”. Indeed. But the teasing reference to the “uninitiated” gives a hint of the thrills to come to those in the know, as he continues “but in certain circles it arouses high passions…”. Those so aroused appear to have been mainly in the rating department of Trafford Council - so perhaps no surprises there. For the rest of us thrill-seekers the case is nevertheless of interest as it considers rates avoidance schemes and also the court’s approach to the ethics of such schemes.

Facts

To say that the scheme in Principled Offsite Logistics Ltd (POLL) was blatant is an understatement. Noting that the 2008 Regulations have spawned a new growth industry, the judge described POLLs and similar businesses as “professional occupiers”. Indeed, POLL’s main business was occupying premises for reward on behalf of landlord commercial property owners and for the avowed purpose of minimising the landlord’s liability to pay NNDR. POLL entered into an agreement with the property-owner on terms that a tenancy was granted to it at a peppercorn rent for a six month term. POLL agreed to pay all business rates assessed on the property throughout the term and the landlord covered utility bills. This was, the Court found, a true tenancy and not a sham. The commercial agreement terms were quite explicit as to the intention and provided for POLL to take a tenancy “of your empty commercial property” stating that the “cost of our service is 20% of the rates saving achieved”; payable “30 days after exit”; however, the fee was refundable “if a local authority successfully disputes our occupation”.

The tenancy was granted, the property-owner subsequently claimed a further empty-rates relief period and the passionate Trafford Council disputed the whole arrangement and claimed that NNDR were payable. Trafford’s principal argument was that there was no beneficial occupation by POLL. Any goods stored must somehow benefit the person storing them and the mere placing of items in the building showed no such benefit. In essence, occupation was only beneficial if goods deposited resulted in a benefit to the depositor. There was also a suggestion that there was an ethical and moral dimension to such occupation in a rates-avoidance scheme.

The decision

The judge disagreed. The transactions were genuine and produced the legal results for which, by the wording of the documents, they provided. The lease created a genuine relationship of landlord and tenant and the terms of service provided for a genuinely payable fee of 20% of the rates saved. Furthermore, the judge felt reminded to guard against a “moral dimension in the search for the nature of occupation that is “beneficial””. The Court must resist any temptation to find that the occupation has to be of “the right kind” to qualify as beneficial. But the occupation still has to be beneficial, in law and in fact, applying a morally neutral analysis.

Practice points

In the present case, the business of POLL was the business of occupation. The purpose of the occupation was not to store goods but “to plant the occupier’s flag”; to populate the premises to whatever extent was required to occupy it in law and fact. It was sufficient for there to be an intention to occupy for reward, without any further commercial or other purpose. The reason why that was done – the motive – was rates avoidance for the landlord, but in the judge’s words “the morality of that is neither here nor there”.


Quarter Day

Sign up for this newsletter

Autumn 2018

  • Up the injunction
  • The only way is ethics (or, high passion in the rates department)
  • A knotty issue: what should I do if I find one of the 'world's worst invasive species' on my land?
  • Silence is not golden – a warning 
  • Can I estopp you there? Deadlines under the Landlord and Tenant Act 1954 and the role of estoppel
  • A victory for landowners and developers in defeating claims to register land as a town or village green
  • He ain't squatting, he's my brother 
  • Overage triggers: a cautionary tale...  
  • Dilapidations: Court declines to give declaration to tenant as to remedial works  
  • New lease accounting rules explained 

For general enquiries

0370 1500 100

Or we can call you back at a time of your choice

Phone lines are open 24/7, 365 days a year


Contact us today

For a free initial consultation

Freephone

0370 1500 100

Prefer not to call?

Use our form

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.

Martyn-Holland
Martyn Holland Partner Meet the team

About Irwin Mitchell

Founded in Sheffield in 1912, Irwin Mitchell has always been a bit different. Our advisers really get to know the people and business that we help.

It's what we call 'expert hand, human touch'.

We have offices around the UK so wherever you are, our experts can help.

Contact Us

Give us a ring to speak to a member of our team in the strictest confidence. Or you can fill out our contact form and we'll ring you back.

0370 1500 100

Our phone lines are open 24/7, 365 days a year

Get a call back

Fill in your details below and we'll be in touch as soon as possible

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.

  • Contact
  • 0370 1500 100
  • Contact Irwin Mitchell
  • Social Media
  • Twitter
  • Facebook
  • YouTube
  • LinkedIn
  • Instagram
  • About Irwin Mitchell
  • About Us
  • Social Responsibility
  • Careers
  • Business Management
  • Alumni Programme
  • SRA Regulated
  • Terms & Conditions
  • Accessibility
  • Privacy & Security
  • Hoaxes
  • Modern Slavery Act Statement 2021
  • Manage Cookie Settings

© 2023  Irwin Mitchell LLP

Irwin Mitchell LLP is authorised & regulated by the Solicitors Regulation Authority. Our Regulatory Information

Dialog that contains a form to request a callback.

Request A Callback

Enter you details below and we'll call you back, at a time of your choice

Preferred date*
Today
Tomorrow

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.