Last month, Local Authorities no doubt felt frustration as the High Court ruling in The Mayor and Commonality and Citizens of the City of London v 48th Street Holding Limited & Anor [2025] EWHC 1130 (KB) concluded in favour of the respondent rates mitigation firm.
This is a case which drew considerable interest across the local government sector. At its core was a challenge to a rate mitigation scheme (RMS) involving minimal occupation of empty commercial premises to trigger repeated business rates exemptions.
Despite arguments from the City of London that the scheme was contrived and inconsistent with the intent of the Non-Domestic Rating (Unoccupied Property) Regulations 2008, the Court upheld the lawfulness of the arrangement. This outcome, while legally sound, will be a disappointment to many business rates departments hoping for a precedent that would support tighter enforcement against similar schemes.
The Court confirmed the legal loophole established in cases such as Makro Properties, Principled Offsite Logistics and PHE v Harlow, observing that any departure from the current situation would need to be initiated by Parliament. It remains to be seen whether legislative reform will follow.
In other areas of business rate avoidance, an increasing number of vacant commercial properties are being claimed as places of worship by fringe or newly formed religious groups, in attempts to obtain exemptions from NNDR. In many cases, actual religious use appears limited or inconsistent, casting doubt on the validity of such claims.
Some Local Authorities have secured Liability Orders against landlords by demonstrating that property owners retained control through (amongst other things) access clauses in agreements. However, these outcomes have often been subject to further legal challenge.
As the tactic gains traction, several Councils have joined forces to bring a High Court case, aiming to establish a definitive legal precedent. We await the outcome of this joint effort with interest. As ever, we will ensure to keep our Local Authority clients updated with any developments as and when they emerge.