Empty Rates Relief: What the Court of Appeal’s July 2026 ruling means for commercial landlords

Commercial landlords have long relied on empty property rates relief to soften the financial impact of void periods. For years, some landlords have also used ‘rates mitigation schemes’- particularly the well‑known box‑shifting model – to trigger repeated cycles of empty rates relief.

However, the Court of Appeal’s July 2026 decision in The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings and Principled Offsite Logistics Ltd has now closed the door on these schemes.

This ruling marks one of the most significant developments in business rates law in recent years, and landlords need to understand what it means for their portfolios.

What was the box‑shifting scheme?

The scheme involved placing boxes containing redundant materials into otherwise empty commercial units for six‑week periods.

Under the previous rules, brought in under the Rating (Empty Properties) Act 2008, owners of empty commercial premises received a business rates holiday of three months, before becoming liable to pay full rates.

However, this could be reset if the property became occupied for six weeks – recently extended to 13 weeks – but then became empty once more. Indeed, if the period of occupation was less than the reset period, it was disregarded and the property was viewed as having been continuously unoccupied.

In the Court of Appeal case, during those weeks, the premises were leased to a mitigation company (Principled Offsite Logistics Ltd, or POLL). However, the intention was to create ‘occupation’ for rating purposes, triggering a statutory reset and allowing landlords to claim repeated cycles of empty rates relief – reducing liability by around two‑thirds.

The previous ruling on ‘occupation’

The High Court had previously accepted this approach, following earlier authority in POLL v Trafford (2018), when Justice Kerr reasoned that ‘occupation’ was just an ordinary word and if someone genuinely occupied a premises – even to trigger a rates exemption – that still counted as occupation ‘of value’ to them. However, the Court of Appeal has now overturned that position.

POLL claimed to have saved its clients more than £500 million through box shifting, while the City of London Corporation said it had lost more than £35 million a year in revenue because of its widespread practice.

What was the Court of Appeal’s new ruling?

The Court of Appeal unanimously held that placing boxes in empty premises solely to obtain a tax advantage does not amount to occupation under non‑domestic rating legislation.

It ruled that the boxes served no commercial or business purpose other than rate mitigation. The leases were genuine, but the activity itself was not ‘beneficial occupation’ in the statutory sense. The Court applied the Ramsay principle, confirming that arrangements with no purpose other than tax avoidance should not be treated as valid occupation.

As a result, the scheme did not trigger fresh periods of empty property relief.

This decision overrules POLL v Trafford and aligns business rates law with the Supreme Court’s approach in Rossendale Borough Council v Hurstwood Properties (2021).

What does this mean for landlords?

1. Box‑shifting schemes are no longer effective. Any arrangement designed solely to create artificial occupation for rates purposes will now fail.

2. Billing authorities may challenge historic claims

Local authorities may revisit past relief periods obtained through similar schemes.

3. Genuine occupation still qualifies

If a tenant is genuinely using the premises for business purposes, empty rates relief rules remain unchanged.

4. Landlords must review their mitigation strategies

This ruling significantly narrows the scope for lawful rates mitigation. Landlords should ensure any strategy is commercially grounded and defensible.

How Attwaters can help

Our Commercial Property team advises landlords across the region on business rates exposure, vacant property strategies and compliance with the evolving legal landscape. If you are concerned about the impact of this ruling, we can help you assess your position and plan next steps.

Contact our team today to discuss your portfolio and ensure you remain compliant under the new legal framework. Call us now on 0330 221 8855 or email us at commercialproperty@attwaters.co.uk.