WHR court win vindicates empty rates scheme

MANCHESTER-based property consultancy WHR won a landmark court ruling last week over the use of a strategy aimed at avoiding empty rates liabilities.

Acting on behalf of cash and carry wholesaler Makro, WHR partner Gareth Buckley had an earlier decision in favour of Nuneaton & Bedworth Council overturned.

This related to an “intermittent occupation strategy” where a small portion of a building could be temporarily occupied for short statutory periods so that it qualifies for empty rates relief.

In Makro’s case, it occupied just 0.2% of a vacant 140,000 sq ft warehouse in Coventry by temporarily storing 16 pallets of documents. These were removed after a statutory period of two months to trigger an empty rate relief period of six months.
 
The council had challenged the move stating that it was a tax avoidance tactic and that the partial occupation was insufficient to qualify for rate relief.

However, Judge Jarman QC ruled that the ratepayer was entitled to minimise his liability for rates and that the method adopted by Makro was legitimate.

Mr Buckley said: “This case will set a precedent as it reaffirms the legitimacy of the intermittent occupation strategy.

“Ultimately, the judgement has reconsidered fundamental rating law and reaffirms the ratepayer’s right to manage his tax liability and confirms that occupation of a building – even if it is only a small part of a building – constitutes full occupation.”

This is a strategy that we have advised many of our clients to adopt for many years in order to manage their empty rate relief.  “However, it is important that it is implemented properly and precisely to comply with the law.”

WHR was advised on the case by law firm DWF.

Dunlop Heywood’s ratings director Stuart Hicks said: “We have seen some creative schemes come into the market since empty rates relief was severely limited by the last Government but this ruling has essentially given carte blanche for businesses to use premises for very limited storage purposes and then claim the relief immediately afterwards.”

The ruling comes weeks after Chancellor George Osborne agreed to review empty rates legislation and appointed Yorkshire MP Julian Sturdy to look at proposals on how to amend the tax.