Ministry urges councils to review ‘box-shifting’ schemes following Court of Appeal business rates ruling

In July the City of London Corporation won an 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.

The City of London had estimated that it lost £35m a year in revenue as a result of the scheme.

The MHCLG this week wrote to the chief finance officers of English billing authorities, summarising the ruling as follows:

“The case concerned a scheme operated by Principled Offsite Logistics Limited known as “box shifting” under which boxes and their contents were placed into an otherwise vacant office to register the then 6 weeks of occupation necessary to trigger a further 3 months of relief from empty property rates. The Court of Appeal considered whether the boxes amounted to occupation for rating.

The Court had regard to the Supreme Court’s earlier decision in Rossendale which considered the role of the “Ramsay principle” in business rates. The Court of Appeal said (at paragraph 53):

The Ramsay principle has in appropriate cases allowed transactions to be disregarded where they have a sole aim of avoiding tax. The rationale for this is that “it is not generally to be expected that Parliament intends to exempt from tax a transaction which has no purpose other than tax avoidance” (Rossendale at [11]). Rossendale has made clear that this rationale applies equally to rating: see in particular at [49]. The Ramsay principle is also not limited to transactions but may cover matters such as status (Rossendale at [14]).

The Court of Appeal found that the placement of boxes of files in an office is not occupation in rating terms (paragraph 83) :

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.

As a result the attempt to secure repeated periods of empty rate relief through box shifting in this case failed. The court also noted that the application of the Ramsay principle in business rates may extend beyond “pure rates mitigation occupation schemes” (paragraph 82).

In the letter the Ministry called on local authorities to ensure they are familiar with this new development in case law.

“In view of this judgement local authorities should now review whether box shifting schemes, and other schemes where the object of the occupation is rates avoidance, should continue to be recognised as occupation for rating and withdraw relief where they conclude it is not.”