Business Rates

Case Study: A long-running battle with Trafford Council

A long-running battle with Trafford Council was finally settled in the magistrates’ court at the end of last month after more than two years of prevarication and delayed proceedings due to Covid.

Our client, let’s call them X Properties Ltd, owned three vacant office buildings on Talbot Road in Manchester that were in the process of being sold for residential re-development. The buildings were occupied by squatters in December 2019, who were eventually evicted in August 2020.

Trafford Council billed X for the empty business rates under section 45 of The Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008. We argued that X wasn’t in possession and that the properties were in fact occupied by squatters, as such it was the squatters who should be responsible for business rates. The weight of evidence appeared overwhelming, clearly demonstrating that squatters were in occupation and that X was taking legal action to obtain possession, which was thwarted on several occasions by the squatters chaining and barricading doors to prevent access by court enforcement officers. Despite this, Trafford remained insistent that unless an individual or group of individuals could be specifically identified then X remained on the hook for empty rates.

There is a long-standing caselaw around what constitutes rateable occupation – Laing (John) & Son Ltd v Kingswood Assessment Area Assessment Committee 1949 sets out 4 ingredients of rateable occupation. Actual occupation, it must be exclusive, have some value or benefit to the possessor and that, finally, the possession must not be for too transient a period.  It was down to the Judge to determine whether the squatters or X had met these requirements.

The identity of the squatters was unknown but their existence was confirmed by anonymous communication with X, regular external inspections and the High Court enforcement officer’s eventual report of an eviction. Interestingly in the council’s evidence, they stated that they had not inspected the properties at any time due to covid and that the presence of squatters would not necessarily have resulted in an inspection in any case. This is despite the council stating in a number of freedom of information requests that they have a ‘robust inspection process in place with a dedicated property inspector’ and that they ‘only levy business rates against the owner or the rateable occupier, in accordance with legislation and relevant case law.’ Something seems to have gone awry in this instance then.

We work regularly with Chris Perrin of Addleshaw Goddard, an authority on business rates who has been involved in numerous prominent rating cases. We brought him in to bolster the legal argument. The belligerence continued. The case eventually wound its way to court and the decision favoured X. The Judge stated that the squatters had been in actual occupation, it was exclusive as they had locked X out, it had value as it provided the squatters with a home and being for over 8 months was not too transient.

An interesting element in this decision is that the judge did not deem it necessary to identify the squatters in order to relieve X of the burden of the empty rates liability. In his summing up District Judge, John McGarva, criticised the Council and found reviewing their evidence was like ‘wading through treacle.’ This is another bloody nose for Trafford’s business rates department who lost another high-profile case on empty rates in Principled Offsite Logistics Ltd v. Trafford Council.

This battle with Trafford is an example of a marked shift in the stance taken by many councils to minimise losses in business rates revenue, with empty rates mitigation schemes, in particular, having much greater scrutiny than in the past. We have another issue that’s reared its head with Trafford – in this new case they are refusing to apply a 6-month void period to a new rating assessment. This isn’t a grey area that requires some interpretation, the legislation is crystal clear on the subject and the council don’t have latitude to make their own rules. The opinions put forward as fact by many authorities can fall short when tested so if you need any advice then please get in touch.

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