A recent High Court ruling has reaffirmed the legality of business rates mitigation schemes, offering welcome clarity and relief to commercial landlords facing the financial strain of vacant properties.
In Mayor and Commonality and Citizen of the City of London v 48th Street Holding Ltd & Principled Offsite Logistics Ltd [2025] EWHC 1130 (KB), the High Court dismissed a challenge by the City of London, upholding the use of short-term occupancy arrangements as a legitimate means of resetting empty rates relief. The decision marks a significant win for property owners, asset managers, and mitigation providers.
Case Summary
If you own or manage vacant commercial space, you’re likely to have some knowledge of business rates mitigation schemes. These schemes often involve placing short-term tenants or occupiers in properties to restart the business rates exemption period – typically three months for most commercial premises.
In this case, Principled Offsite Logistics Ltd (“POLL”) – a company specialising in such mitigation schemes – installed temporary occupiers, such as light storage users, for 6-week periods, allowing landlords to claim renewed rates relief.
The City of London challenged the practice, alleging it amounted to tax avoidance, and sought to recover over £110,000 in unpaid rates for periods in 2022-2023.
The High Court rejected this argument, and found that even temporary, low-level commercial use qualifies as legitimate occupation, meaning the rates relief reset was valid. The City of London has sought permission to appeal this decision to the Court of Appeal, but it is unclear whether permission will be granted.
Why this matters for Landlords and Occupiers
The recent POLL ruling provides renewed legitimacy for providers of business rates mitigation schemes, as well as reassurance for landlords who utilise structured short-term occupation to manage business rates liability.
Ultimately, we now have confirmation that rates mitigation through short-term occupation schemes remains lawful – even if undertaken for the sole purpose of mitigating business rates liability – just as long as such occupation is genuine and commercial, and in line with the recent POLL ruling.
However, it is equally important to note that many local authorities continue to take a critical view of mitigation schemes they perceive as artificial or cosmetic, and that since 2024 (i.e. after proceedings began in the recent POLL case), the minimum occupation period required before a new relief period is recognised has increased from 6 weeks to 13 weeks. As such, we anticipate that rates mitigation scheme providers will need to adapt their business models to accommodate this change, if they have not done so already.
Strategic Advice for Property Stakeholders
Whether you’re a landlord, real estate investor, asset manager, or a business with surplus space, recent legal developments offer important guidance worth considering.
- Plan proactively for void periods. Short-term occupation can be used strategically to minimise financial impact during vacancy periods. It’s also important to budget for business rates exposure as part of your overall asset management strategy.
- Protect your cashflow. Business rates can amount to tens or even hundreds of thousands of pounds annually on larger properties. Taking advantage of lawful mitigation strategies helps preserve profit margins and enhance asset performance.
- Review and document arrangements carefully. Work only with occupiers or mitigation scheme providers with a proven track record, and ensure that all occupation agreements are genuine, legally compliant, and properly documented. It’s critical to avoid arrangements that may be seen as purely avoidance-driven, as these can lead to significant legal and financial risks.
How We Can Help
The High Court’s decision gives the green light to continue using structured short-term occupation schemes to mitigate business rates – but the regulatory landscape continues to shift. Staying ahead means understanding your legal position, adapting to new rules, and working with trusted advisers.
We support a diverse range of landlords, real estate investors, and occupiers in navigating the complexities of business rates and empty property relief. Should you have any queries about the issues raised in this article, please contact one of our property or property litigation specialists below.
