Business Rates: Courts rule in favour of empty rates mitigation

Date: 5th November 2012
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The High Court has ruled in favour of empty rates avoidance giving reassurance to landlords of vacant properties.

The High Court overturned a previous decision held in favour the Council who had contested Makro’s use of temporary occupation of one of its vacant warehouses in order to mitigate is empty rates liability.

Under the current legislation, when a commercial property becomes vacant, landlords are liable to pay empty rates, however, they are entitled to an initial ‘rate free’ period of 3 months for shops and offices and 6 months for industrial properties after expiry of which empty rates become payable at the full rate.

Makro had a 140,000 ft<sup>2</sup> warehouse in Coventry which it ceased to occupy and which it no longer required. Rather than allowing the 6 month period of relief to expire, Makro stored 16 pallets of documents in the warehouse, which occupied just 0.2% of its floorspace, for a period of two months in order to be able to claim 6 months empty rate relief when this occupation expired. Nuneaton & Bedworth Borough Council contested this on the grounds that its occupation was ‘de-minimis’ or insufficient given the size of the unit.

The High Court rejected this and ruled that Makro were entitled to a new period of 6 months relief from empty rates.

A second case also provides welcome news to owners of vacant properties. A recent Magistrates Court decision has approved another form of empty rates avoidance scheme. In this case, Cheshire & West Cheshire Council v Public Safety Charitable Trust, a vacant office building was let to a charity to house wireless and Bluetooth equipment and the charity claimed 80% charitable relief. The Court found that this occupation, although slight, was enough to amount to occupation of the whole and was of value and benefit to the charity.

For Further information and to discuss how you can mitigate your empty rates liability contact Mark Keirl on 0161 429 1663 markkeil@roger-hannah.co.uk or Paul McGarrigle on 0161 429 6616 paulmcgarrigle@roger-hannah.co.uk

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Mark Keirl MRICS Director