The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings Limited & Anor

Facts

The City of London, as billing authority, challenged a non-domestic rate mitigation scheme known as "box shifting", promoted by Principled Offsite Logistics Limited (POLL). 48th Street Holdings Limited, the registered leasehold proprietor of unoccupied office units at 2 America Square, EC3, engaged POLL to reduce its liability for unoccupied property rates. Once the three-month exemption under regulation 4(a) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 had run out, 48th Street granted POLL a six-month lease at a peppercorn rent. At the same time a break notice was served ending the lease after six weeks. POLL placed boxes in the unit for those six weeks and accepted liability for rates as occupier. The boxes were then removed, and 48th Street claimed a further three months' exemption on the basis that the six-week period of occupation triggered a "reset" under regulation 5 of the 2008 Regulations. The cycle was repeated, and 48th Street paid POLL fees linked to the savings. It was common ground that the boxes served no commercial or business purpose except rate mitigation, and that the lease was not a sham. If effective, the scheme reduced liability by around two thirds. The City sued 48th Street for unpaid rates and sought declaratory relief against both companies. Charles Bagot KC, sitting as a Deputy High Court judge, followed R (Principled Offsite Logistics Ltd) v Trafford Council, held that the scheme was effective and dismissed the claims. Bean LJ granted permission to appeal because the scheme was widely used and the Court of Appeal had not yet considered whether it worked.