The beginning of the end for box shifting? - Case Law Update

On the 29th July 2026, judgement was passed in The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings Limited & Another [2026] EWCA Civ 970. This case was an appeal against the 2025 decision, our summary of the original decision can be viewed here.

Siding with the City of London ("COL"), the judge in this instance allowed the appeal and overruled the decision of R (POLL) v Trafford Council [2018] RA 499 ("Trafford"). This allows COL to recover unpaid non-domestic rates totaling £111,475.30 plus interest relating to a rates avoidance scheme hat took place across four floors of 2 America Square.

The case revolves around intermittent occupation, also known as box shifting; the practice of occupying an empty building for a set period of time (historically 6 weeks but now 13 weeks) to repeatedly cycle empty exemptions until a long term occupier can be found.

This exact case dealt with the "pure rate mitigation occupation" form of box shifting; where it was agreed between all parties that the scheme operator intermittently placed boxes within the building with the sole intent of mitigating rates. The boxes served no other purpose.

It is possible for property owners to implement this scheme themselves but there is an entire industry dedicated to offering this service. This scheme was estimated by the Local Government Association in 2019 to cost councils around £125 million per annum.

This case follows R (Emeraldshaw Ltd) v Sheffield Magistrates' Court [2026] 1 WLR 1640 and Rossendale Borough Council v Hurstwood Properties (A) Limited [2021] UKSC 16 ("Hurstwood") as another major win for billing authorities combatting empty rates mitigation schemes.

The Ramsay Principle

This case sought to follow the precedent originally set in Hurstwood that the Ramsay principle (W T Ramsay v. Inland Revenue Commissioners [1982] AC 300) applied in a rating context. To give an extremely condensed summary of the Ramsay principle; one must look at the transactions intended to be affected by the charge or exemption and seek to discover whether they fall within the statutory intent of those charges or exemptions.

How that applies here, is by asking whether the statutory intent of Parliament was for the box shifting practice (the transaction) to successfully mitigate rating liability of empty properties (the exemption).

The defendants, 48th Street Holdings Limited (the property owner, "48SH") and Principled Offsite Logistics Limited (the scheme operator, "POLL") suggested that the The Non-Domestic Rating (Unoccupied Property) (England) (Amendment) Regulations 2024, which increased the reset period to gain an empty exemption from 6 weeks to 13 weeks showed that Parliament were tolerant of the scheme.

They argued that the during the preceding consultation to the 2024 Regulations the issue of box shifting was raised and if box shifting was truly outside of the statutory intent, then the Government would have taken more severe and comprehensive measures.

COL suggested that Parliament clearly did not intend for a practice that, scheme operators themselves admit, has no commercial benefit beyond the avoidance of rates. The point of introducing a charge for empty properties was to entice owners to bring the property back into occupation. This scheme removes some of the financial burden of an empty property, allowing the property sit vacant for longer.

The Judge sided with COL stating that "the legislature cannot sensibly be taken to have intended that [the empty rates legislation] should have the effect that the temporary placement of items in an otherwise unoccupied hereditament amounts to occupation where the sole aim of doing so is to generate occupation for the purposes of those provisions".

The Laing Ingredients

COL also argued that the scheme failed to satisfy the rules of occupation set out in John Laing v. Kingswood [1948] 1 KB 344 ("Laing"). Within Laing, four ingredients necessary for rateable occupation were set out. Relevant to this case is beneficial occupation; which simply asks whether there is an actual benefit to the occupation.

COL's stance is POLL had no beneficial occupation of the property and without beneficial occupation, there is no rateable occupation. So, in this case, POLL would have not have occupied for the necessary time (6 week reset period in this case) to receive another empty exemption.

The common law position established in Trafford was that occupation purely for the intent of receiving mitigated business rates constituted beneficial occupation.

COL argued this point, stating that mitigated business rates could only be achieved if there was satisfactory occupation, so if there are no mitigated business rates then there is no occupation.

COL stated that it should be asked whether there is beneficial occupation before the application of any reliefs or exemptions have been applied. For there to be beneficial occupation, you must work backwards and apply the empty exemption first.

Conversely, POLL stated that occupation could be tested by imagining a situation where empty property did not attract a charge (as was the situation prior to 1966) and only occupied properties were liable for rates. In that scenario, would POLL be deemed in occupation and liable or would the property be deemed empty and exempt?

The Judge agreed with COL that the decision in Trafford required circular reasoning conditional on future events.

The Judge made clear that common law is not frozen in time and must develop and address new situations. When Laing was decided, there were no charges for empty rates and there was no reason to create occupation in order to reduce a rates bill. It is therefore appropriate for the court to consider whether occupation undertaken for rate mitigation purposes can be considered occupation for the purpose of triggering empty exemptions.

The Judge also stated their belief that following POLL's argument and the decision in Trafford, there was really no need for the beneficial occupation ingredient established in Laing. As if merely planting a flag constituted rateable occupation then only actual occupation was required (providing it is exclusive and non-transient).

The Judge felt POLL's presence in the building would plainly amount to occupation and the Local Authority would demand rates. It was agreed that there was a valid lease and that POLL did have items in the building; COL's argument was equating benefit to motivation of occupation. The Judge made clear that the focus must be instead on use and intention.

Summary

Whilst this is a win for COL and billing authorities in general, it remains to be seen whether POLL and 48SH will challenge this decision in the Supreme Court.

This decision also solely relates to "pure rate mitigation occupation", this decision does little to stop box shifting when the boxes have some value to the occupier. What stops box shifters from simply using more intentional boxes?

There is still clear need for more specific legislative action to stop the practice if the Government does intend to clamp down on rates avoidance.

The full judgement can be read here: https://caselaw.nationalarchives.gov.uk/ewca/civ/2026/970

If you have any questions regarding this decision, please get in touch with us at info@hollowaybond.co.uk or 001285 422100.