“Pure Rate-Mitigation Occupation” Is Not Occupation for Empty Property Relief Reset

1) Introduction

This appeal addresses a widely-used non-domestic rating (“NDR”) mitigation strategy known as “box shifting”. The scheme was promoted by the second respondent, Principled Offsite Logistics Limited (“POLL”), and implemented at unoccupied office units at 2 America Square, EC3 (the “Premises”), owned (for rating purposes) by the first respondent, 48th Street Holdings Limited (“48thStreet”).

The City of London (“CoL”), as billing authority, challenged the scheme by seeking (i) recovery of unpaid NDR and (ii) declaratory relief. The High Court upheld the scheme’s effectiveness, largely following R (Principled Offsite Logistics Ltd) v Trafford Council [2018] EWHC 1687 (Admin), [2018] RA 499 (“POLL v Trafford”), and rejected the argument that Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021] UKSC 16, [2022] AC 690 (“Rossendale”) undermined that approach.

The Court of Appeal allowed CoL’s appeal and held that “pure rate mitigation occupation”—placing items in otherwise empty premises solely to trigger the statutory “reset” of empty property relief—is not “occupation” for rating purposes. In doing so, it overruled POLL v Trafford.

Key issues

• Whether placing boxes with redundant contents into empty premises for the minimum “reset” period can amount to “occupation” under the common law rules incorporated by section 65(2) of the Local Government Finance Act 1988 (“LGFA 1988”).
• How purposive interpretation (including Ramsay principles) applies to NDR avoidance/mitigation schemes after Rossendale.
• Whether “beneficial occupation” can be satisfied where the only “benefit” is the hoped-for rating consequence (a circularity point).

2) Summary of the Judgment

The Court of Appeal (Falk LJ giving the lead judgment, with Bean LJ and Holgate LJ agreeing) held:

• The statutory regime for empty property rates (LGFA 1988, sections 45, 65; and the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 (“the 2008 Regulations”), regulations 4 and 5) must be interpreted purposively, applying the Ramsay approach as explained in Rossendale.
• The placement of items in an otherwise unoccupied hereditament does not amount to occupation where: (i) the sole aim is to generate “occupation” for the purposes of regulations 4 and 5, (ii) there is no commercial or business purpose save for rate mitigation, and (iii) the putative occupation is “beneficial” only because of the claimed rating advantage.
• Such “pure rate mitigation occupation” is outside the “class of fact” Parliament intended to count as occupation for triggering the reset of empty property relief.
• The Court therefore allowed the appeal and expressly stated that POLL v Trafford should be regarded as wrongly decided.

3) Analysis

3.1 The statutory framework and the “reset” mechanism

Under section 45 LGFA 1988, the “owner” (defined in section 65(1) as the person entitled to possession) is liable for NDR when a hereditament is unoccupied. The 2008 Regulations provide “empty property relief” for an initial period (regulation 4(a): three months for most buildings; regulation 4(b): six months for certain industrial premises).

Regulation 5 prevents short occupancies from stopping the “clock”: at the relevant time, if a hereditament becomes occupied and then becomes unoccupied again within less than six weeks, it is treated as continuously unoccupied. In practice, this created an incentive to occupy for at least six weeks to “reset” the relief period. (From 1 April 2024, the 2024 Regulations extended the period from six to thirteen weeks.)

The scheme exploited this structure: POLL would take a short lease, move boxes in for six weeks, accept NDR during that period, then vacate—allowing the owner to claim a fresh three-month exemption, repeating the cycle.

3.2 The precedent landscape: from “box shifting” approvals to Rossendale

(a) “Box shifting” and minimal-use cases before this appeal

• Makro Properties Ltd v Nuneaton and Bedworth BC [2012] EWHC 2250 (Admin), [2012] RA 285 (“Makro”): boxes of documents were stored in a warehouse for six weeks. A key factual feature was that the documents were “of value” and had to be retained; storage had practical benefit. The court rejected use of Ramsay (specifically Furniss v Dawson [1984] 1 AC 474) to negate occupation.
• Sunderland CC v Stirling Investment Properties LLP [2013] EWHC 1413 (Admin), [2013] RA 411 (“Sunderland v Stirling”): the installation of a Bluetooth transmitter using a “minute fraction” of space could still be occupation; the scale of use was not determinative.
• R (Principled Offsite Logistics Ltd) v Trafford Council [2018] EWHC 1687 (Admin), [2018] RA 499 (“POLL v Trafford”): Kerr J held that the “benefit” required by the third John Laing ingredient could be satisfied where the “value” was “the occupancy itself”, with the intention “to occupy for reward”, even if the only practical driver was rates avoidance.
• R (Secretary of State for Health and Social Care (on behalf of Public Health England)) v Harlow DC [2021] EWHC 909 (Admin), [2021] 4 WLR 65 (“PHE v Harlow”): Kerr J upheld occupation in a context where crates contained documents that the public body needed (or might need) to retain under its retention policy, while also endorsing a broader proposition that obtaining a future rates exemption could itself be a sufficient “purpose”.

The Court of Appeal in the present case did not purport to decide the correctness of Makro or PHE v Harlow on their facts; it confined itself to “pure rate mitigation occupation” where the items are redundant and the only point is the rating outcome.

(b) Rossendale and the Ramsay-based purposive approach in rating

Rossendale was a Supreme Court decision about the meaning of “owner” (section 65(1) LGFA 1988) in the context of avoidance schemes involving SPVs and short leases. Crucially, it also confirmed that:

• Ramsay is not a tax-only doctrine; it reflects modern purposive interpretation (via Barclays Mercantile Business Finance Ltd v Mawson [2004] UKHL 51, [2005] 1 AC 684 and UBS AG v Revenue and Customs Comrs [2016] UKSC 13, [2016] 1 WLR 1005).
• Courts should identify the statutory “class of facts” intended to attract the charge or exemption and then decide if the real-world facts “answer to the statutory description”.
• Parliament cannot sensibly be taken to have intended that arrangements “conferred for no purpose other than the avoidance of liability for rates” should succeed (Rossendale at [49]).

Rossendale was reinforced in R (Emeraldshaw Ltd) v Sheffield Magistrates’ Court [2025] EWCA Civ 1601, [2026] 1 WLR 1640, which confirmed Rossendale is not confined to “unusual circumstances” like insolvency abuse.

3.3 Legal reasoning in [2026] EWCA Civ 970

(a) Legislative purpose: empty property rates are deterrent, with targeted exceptions

The Court anchored interpretation in the purpose explained in Rossendale: empty property rating was introduced to deter owners from keeping property vacant for their own advantage and to encourage bringing accommodation back into use, while allowing limited, justified exemptions (e.g., initial void periods, and other “reasonable excuse” categories in regulation 4).

On the Court’s analysis, POLL’s scheme—if legally effective—made two-thirds of the empty property charge optional, undermining the statutory purpose.

(b) “Occupation” under section 65(2): not frozen; must operate consistently with the modern purposive approach

POLL relied on section 65(2) LGFA 1988, which imports the pre-1988 common law rules of occupation (classically summarised in John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344). The Court gave two linked answers:

• Ramsay is itself a “rule” of purposive interpretation applicable to rating after Rossendale, and therefore relevant to how occupation concepts are applied within the statutory scheme.
• The common law develops; it must respond to new avoidance fact-patterns that did not exist before unoccupied rates were introduced. “Occupation” cannot be applied in a way that defeats the modern statutory purpose.

(c) The decisive point: “beneficial occupation” cannot be satisfied by circular reliance on the rating advantage

The Court focused on the third John Laing ingredient: occupation must confer “some value or benefit to the possessor”. In “pure rate mitigation occupation”, the activity has no independent utility; any “benefit” arises only if the law treats the activity as occupation so as to generate an exemption on later unoccupation. That is circular: the occupation is said to be beneficial only because it is assumed to count as occupation for the scheme to work.

This reasoning also answered a structural concern: if mere physical presence of boxes sufficed whenever exclusivity and duration were met, the “beneficial” ingredient would be hollowed out (a point the Court accepted had “force”).

(d) Motive vs purpose: the Court’s approach does not (impermissibly) import a motive test

POLL v Trafford had sought to avoid a “motive” inquiry by treating “occupation for reward” as a sufficient purpose. Here, the Court held that POLL’s own argument necessarily depended on motive: the only asserted “benefit” was the reason for acting (rates mitigation), not any independent “what is done” utility. Accordingly, excluding “motive” did not rescue the scheme.

(e) Rejection of “later legislative materials” as an interpretive guide (2024 Regulations)

The High Court had relied on the 2024 Regulations and the consultation context as supporting the legality of box shifting. The Court of Appeal rejected that approach:

• Later amendments and consultations are generally not legitimate aids to interpreting earlier legislation.
• The narrow “fixing ambiguity” exception (Attorney-General v Clarkson [1900] 1 QB 156; Comr of Inland Revenue v Hang Seng Bank Ltd [1991] 1 AC 306; R (N) v Walsall Metropolitan Borough Council [2014] EWHC 1918 (Admin), [2014] PTSR 1356) did not apply because there was no relevant ambiguity—and in any event nothing in the 2024 change signalled approval of pure box-shifting.

(f) Secondary legislation point rejected

POLL argued that because regulation 5 is secondary legislation, the Secretary of State could have changed it but did not; therefore courts should not “interfere”. The Court responded that purposive interpretation applies equally to primary and secondary legislation; regulation 5 (in substance) also has legislative roots in primary legislation; and delegated powers must be exercised consistently with the Act’s policy (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997).

(g) Limited assistance from other contexts

The Court considered but found limited assistance in S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62, [2019] AC 249 (“Franses v Cavendish”), which concerned intention under section 30(1)(f) of the Landlord and Tenant Act 1954 and did not turn on Ramsay.

3.4 The new rule/precedent established

The operative holding is expressed at the conclusion: sections 45(1) and 65(2) LGFA 1988 and regulations 4(a)/(b) and 5 of the 2008 Regulations do not treat as “occupation” the temporary placement of items in an otherwise unoccupied hereditament where:

• the sole aim is to generate occupation for the operation of regulations 4 and 5;
• there is no commercial or business purpose other than rate mitigation; and
• the putative occupation is “beneficial” only because of the claimed rate mitigation benefit.

The Court labelled this category for convenience as “pure rate mitigation occupation” and held it falls outside the intended “class of facts” which counts as occupation under the statutory scheme.

3.5 Impact

(a) Immediate practical consequences

• “Box shifting” schemes that fit the Court’s “pure rate mitigation occupation” description should no longer succeed in triggering the regulation 5 reset for empty property relief in England.
• POLL v Trafford is overruled, removing the principal High Court authority relied on to validate such arrangements.
• Billing authorities are likely to reassess outstanding and future cases involving minimal, non-functional occupancies designed solely to obtain repeated relief periods.

(b) Boundary questions left open

The Court expressly noted that CoL was not challenging other factual variants (including those in Makro and PHE v Harlow). As a result, future disputes are likely to focus on:

• Whether items placed in premises have an independent storage/function utility (even if minimal), or are effectively redundant.
• Whether “commercially irrelevant contingencies” inserted to manufacture an “independent purpose” may be ignored under Ramsay principles (the Court flagged this as an issue for future cases, referring to Inland Revenue Comrs v Scottish Provident Institution [2004] UKHL 52, [2004] 1 WLR 3172 and UBS).
• How far courts will scrutinise attempts to repackage pure mitigation into superficially functional use.

(c) Doctrinal significance for rating avoidance cases

This decision extends and concretises Rossendale’s purposive/Ramsay reasoning beyond “owner” (section 65(1)) into “occupation” (section 65(2)) and the operation of the regulation 5 reset. It confirms that rating law will not treat statutory triggers (like “occupation”) as mechanically satisfied where the only “benefit” is the hoped-for statutory consequence and that consequence would undermine the scheme’s purpose.

4) Complex concepts simplified

• Hereditament: the unit of property used for rating (broadly, the property entered in the rating list).
• Empty property relief: a time-limited exemption from empty property rates (generally three months) after premises become unoccupied.
• Regulation 5 “reset”: if there is a sufficiently long period of occupation (formerly six weeks; now thirteen weeks for periods starting on/after 1 April 2024), the next vacancy can attract a fresh relief period.
• Rateable occupation / the John Laing test: the common law requires (i) actual occupation, (ii) exclusivity, (iii) value/benefit (“beneficial occupation”), and (iv) not too transient (John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344; reaffirmed in Cardtronics UK Ltd v Sykes (Valuation Officers) [2020] 1 WLR 2184).
• Ramsay principle (in this context): courts interpret legislation purposively and look at arrangements realistically; Parliament is not taken to have intended that steps with no purpose other than avoiding the charge should succeed (Barclays Mercantile; UBS; Rossendale).
• Circular “benefit”: where the only claimed value of occupation is the statutory relief that depends on the occupation being recognised in the first place, the “benefit” is circular and does not satisfy “beneficial occupation”.

5) Conclusion

The Court of Appeal in [2026] EWCA Civ 970 establishes that “pure rate mitigation occupation” does not count as “occupation” for the purposes of resetting empty property relief under the 2008 Regulations. Applying Rossendale’s purposive approach (including Ramsay principles), the Court held that Parliament cannot sensibly be taken to have intended the empty property charge to be made substantially optional by contrived, functionless, temporary placements of items whose only “benefit” is the rating advantage.

By overruling POLL v Trafford, the Court reshapes the legal landscape for empty-rate mitigation arrangements and signals a more robust approach to schemes that attempt to manufacture statutory conditions without any independent, real-world utility.