Collection and enforcement - recent cases involving empty rates


Empty Rates Mitigation

The Cases

  • R (Makro Properties Ltd) v Nuneaton and Bedworth BC (2012) EWHC 2250 (Admin)
  • Sunderland City Council v Stirling Investment Properties LLP (2013) EWHC 1413 (Admin)
  • Kenya Aid Programme v Sheffield City Council (2013) EWHC 54 (Admin)
  • Public Safety Charitable Trust v Milton Keynes Council (2013) EWHC 1237 (Admin)

Summary – empty property cases

  1. Very slight physical presence may suffice to constitute 6 weeks’ rateable occupation and so trigger empty rates holiday
  2. Must be clear evidence of benefit to the occupier if ‘de minimis’ threshold is to be overcome
  3. Risk that Valuation Officer will rely on temporary user to split area of temporary occupation from host warehouse/industrial hereditament: Sunderland at (74)
  4. Irrelevant that tax avoidance scheme: Makro at (56)

Summary – charitable relief cases

  1. Recent High Court decisions establish a broad approach to question whether premises are ‘wholly or mainly used for charitable purposes’
  2. Former assumption that inquiry limited to the purpose of the use has been rejected as too narrow and contrary to legislative intention in creating mandatory charitable relief
  3. Reflects judicial distaste for attempt to deploy charitable relief as part of empty rates avoidance scheme?
  4. Implications for ‘genuine’ charitable occupiers – will billing authorities under financial pressure take tougher stance on ‘underused’ premises occupied by charities?

Empty Rates Liability

The Case

  • Schroder Exempt Property Unit Trust v Birmingham City Council

Summary

In the on-going battle against the empty rates burden, the High Court has recently dealt a costly blow to landlords of empty properties. The judgement has reminded landlords that an obligation to pay rates can arise (as ‘the owner’) when it has the legal right to take possession, even though it is careful not to do so. In this case, the liquidator disclaimed the interest in the property but the guarantor continued to pay rent pursuant to the guarantee covenants in the lease. The judge ruled however, that, after the disclaimer, the lease ceased to exist and the landlord was entitled to immediate possession which is what gave the landlord its rates liability, and it was ordered to pay almost £600,000 in empty rates.

Empty Rates Exemptions

The cases

  • Pall Mall Investments (London) v Gloucester City Council [2014] EWHC 2247 (Admin)

Summary

Pall Mall sought exemption from liability to pay empty rates on the grounds that their non-occupation of a number of properties was the result of dilapidations, caused at least in part by vandalism. It argued that the state of the properties was such that occupation was prohibited by law under Health and Safety Legislation. The court decided that the relevant magistrates court had been correct to decide that Pall Mall was not exempt from paying empty rates on properties. At no time had the law prevented Pall Mall from entering the properties to restore them. Property owners wishing to rely on the 'prohibited at law' exemption must ensure that this is actually the case.

  • Burnley Borough Council v Huron Properties Limited (2015)

Summary

A 'listed building' exemption was applicable as it was proven to the court that the 'listing' was applicable to the whole (not a part) of a building's address and consequently the hereditament.

Empty Property Valuation

The Case

  • Newbigin (Valuation officer) v S.J & J. Monk [2017] UKSC 14

Summary

The case concerned the first floor of a three storey building which was undergoing renovation works. Monk made a proposal to reduce the rateable value to a nominal value due to the ongoing works. The supreme court decided that a commercial building undergoing redevelopment does not have to be valued as if it was still useable. Whilst the physical state of the premises is assumed to be in repair, the mode or category of occupation is found in reality and assessed objectively. In this case the premises were categorised as premises under construction, since they were not capable of beneficial occupation and ascribed a rateable value of £1. The effect of the decision is that a building undergoing construction should only have a nominal rateable value.