City of London wins appeal over business rates scheme that costs it £35m a year in lost revenue

The appeal in The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings Ltd & Anor [2026] EWCA Civ 970 (29 July 2026) centred around a scheme operated by Principled Offsite Logistics Limited (POLL) with 48th Street Holdings Ltd as its client.

POLL – which describes itself as the UK’s "gold standard” firm for empty business rates mitigation – places boxes with redundant contents in otherwise unoccupied premises on a recurrent basis to reduce liability to non-domestic rates by around two thirds.

The firm claims to have saved its clients over £500m through use of its services.

The City of London Corporation meanwhile considers that the mitigation method and variants of it are causing it £35m per annum in lost revenue.

In May last year, Charles Bagot KC, sitting as a deputy High Court judge, ruled that POLL’s scheme was lawful, finding that regulations impose liability for rates on the owner of unoccupied property after it has been vacant for three months.

The City of London then appealed the decision. The litigation at the Court of Appeal concerned regulations set out in the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008.

A summary of POLL’s approach, agreed upon by all parties at the Court of Appeal, said that on the expiry of the first three months following the unit becoming unoccupied, 48th Street granted POLL a six-month lease of the unit at a peppercorn rent.

Contemporaneously, a break notice was served terminating the lease after six weeks. This notice was served pursuant to a provision of the lease that permitted either party to determine the lease on 14 days' notice at any time from six weeks following grant.

POLL then placed boxes and their contents in the unit for those six weeks, claiming to be the occupier and accepting liability for non-domestic rates on that basis.

At the end of the six-week period, the lease terminated and the boxes were removed. 48th Street then claimed exemption for a further period of three months. The cycle repeated for so long as needed.

Under contractual terms entered into at the same time as the lease, 48th Street agreed to pay POLL a fee equal to a percentage of the savings achieved.

The scheme, referred to in the judgment as "box-shifting", reduced the overall liability to non-domestic rates by approximately two-thirds.

The agreed case summary at the Court of Appeal further recorded that it was common ground that:

1. the sole purposes of placing boxes in the Premises was to generate "occupation" for the purposes of regulation 5 of the 2008 Regulations;
2. the placing of the boxes and their contents in the Premises served no commercial or business purpose save for rate mitigation, which was the business purpose of POLL;
3. the benefit of the "occupation" was solely the claimed rate mitigation benefits; and
4. the lease was not a sham: it and the other legal arrangements produced the legal results for which they provided.

Lady Justice Falk ultimately allowed the appeal.

She termed the scheme as a "pure rate mitigation occupation scheme", noting that the City of London was not seeking to challenge other forms of box-shifting schemes in the litigation, such as those considered in Makro and PHE v Harlow.

In allowing the appeal, Falk LJ overruled POLL v Trafford, adding: "Section 45(1) of the 1988 Act and regulations 4(a) and (b) and 5 of the 2008 Regulations do not have the effect that the placement of items in an otherwise unoccupied hereditament amounts to occupation where the sole aim of doing so is to generate occupation for the purposes of those provisions, there is no commercial or business purpose save for rate mitigation, and the putative occupation is 'beneficial' only due to the claimed rate mitigation benefits."

Lord Justice Holgate and Lord Justice Bean, Vice-President of the Court of Appeal, Civil Division, both agreed.

A City of London Corporation spokesperson said the Court of Appeal's decision represented a “significant victory for local authorities across England”.

The spokesperson said: “This landmark ruling closes one of the most widely used tax avoidance schemes in the country and helps safeguard revenues that support essential public services.

“We are proud that the City of London Corporation has led the way nationally in pursuing this case. For more than a decade, councils across the country have seen hundreds of millions of pounds of public revenue lost through artificial business rates avoidance schemes and we believe the decision restores fairness, protects money that funds vital local services, and provides greater certainty for councils, ratepayers and property owners alike.”

POLL has been approached for comment.

Adam Carey