Local authorities in England are being told to take a fresh look at so-called ‘box-shifting’ schemes and other tactics designed purely to dodge business rates after a court ruling.
The Court of Appeal has ruled that placing boxes of files in an empty office did not count as genuine occupation.
The case, brought by the City of London Corporation, centred on a scheme in which boxes were placed in a vacant office for six weeks – just long enough to trigger a further three months of empty property relief.
Judges applied the ‘Ramsay principle’, ruling the arrangement had no commercial purpose other than mitigating rates, and said the same reasoning could apply to other avoidance schemes beyond box-shifting.
The Ministry of Housing, Communities and Local Government has written to council finance chiefs urging them to review similar arrangements.
Councils that conclude a scheme has no purpose beyond avoiding tax have been told they should withdraw the relief.
