Company wins High Court battle over business rates and subletting

A company was not liable for business rates on a building it does not wholly occupy, the High Court has found.

Mr Justice Saini decided in ATOS IT Services v Fylde Borough Council [2020] EWHC 647 (QB) that case law regarding the requirement for exclusive occupation applied, so ATOS was not liable for business rates until the rating list accurately reflected the property it occupied.

Jennifer Thelen, of 39 Essex Chambers, represented Fylde and said the case involved a challenge by ATOS to liability for business rates as it did not occupy the entire property identified in the relevant ratings list.

ATOS had sublet a portion of the property and claimed this meant one of the conditions for liability for business rates, exclusive occupation, was not satisfied.

Fylde argued that the appropriate remedy for ATOS was to appeal the valuation, to have the ratings list subdivided.

Sanai J heard Fylde’s appeal against an order made in favour of ATOS by HHJ Bird at Manchester County Court.

He had ruled that a person is only in rateable occupation if he occupies the whole unit as a whole. Fylde then argued the remedy for ATOS was to seek an amendment of the description of the hereditament in the rating list, and that the it was obliged in law to collect the disputed sum.

The council said HHJ Bird misconstrued the material legislative provisions, and failed to apply well-established authority.

Sanai J said: “Each side accuses the other of inviting a radical departure from what is claimed to be the orthodox position in the world of rating law.”

He ruled: “In my judgment, the judge was right to dismiss the council's applications for summary judgment and striking-out, and to hold that ATOS was (in principle) entitled to repayment of the disputed sum.

“In short, the requirement that occupation be exclusive cannot be met where parts of the hereditament are let and occupied by a third party…it is necessary to find one occupier or a number of joint occupiers of the relevant hereditament before rateable occupation can arise.”

He said that were the rateable list corrected so that ATOS was shown only with the areas of the building it occupied it would then be liable for rates on those.

Mark Smulian

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