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Business rates

Occupation for business purposes

Very small part of premises used

Sunderland City Council v Stirling Investment Properties LLP
[2013] EWHC 1413 (Admin)

Summary

The use by the tenant of a very small part of the premises did not prevent this occupation being rateable occupation. The landlord was therefore entitled to six months relief from its liability to pay business rates on expiry of the tenant’s lease.

Facts

L let premises to T under a lease for 43 days at a nominal rent. T used the premises for the installation of a Bluetooth server measuring 95 x 65 x 30mm with a battery of 350 x 240mm.

After the lease came to an end, the county council (CC) demanded business rates from L. L claimed that it was exempt from the obligation to pay business rates for six months from the end of the lease pursuant to regulation 4(b) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations (SI 2008/386) (2008 Regulations). CC argued that the use of the premises by T was not sufficient to trigger a new exemption period on the ending of the lease.

The regulations

The 2008 Regulations provide that empty industrial and warehouse property may claim a complete exemption from business rates for a period of six months only. The Regulations provide that where a lease is granted for more than six weeks, the 100% six months relief period comes to an end on the granting of the lease, and a new 100% six months relief period will start on the end of the lease.

The question was whether T’s use of the premises under the lease amounted to rateable occupation and was therefore sufficient to trigger the commencement of a new 100% six months relief period on the expiry of T’s lease.

Rateable occupation

The case of John Laing & Son Ltd v Kingswood Assessment Committee [1949] 1KB 344 states that rateable occupation requires actual exclusive occupational possession that has some benefit or value to the occupier, and that has a sufficient quality of permanence.

First instance

The District Judge in the Magistrates’ Court held that T had occupied the premises and that the use of the premises was beneficial to T. T’s rateable occupation had therefore been established and CC were not entitled to the business rates demanded. CC appealed to the High Court

Decision on appeal

Dismissing CC’s appeal, the High Court upheld the District Judge’s findings, agreeing that T had exclusively occupied the premises for the purpose of the permitted user. The presence of the Bluetooth apparatus was actual and exclusive occupation, albeit of a fraction of the demise. The occupation was beneficial to T, although at a nominal rent. Further, T had agreed to indemnify L for rates, which also reflected the value of the premises to T.

Comment

The current economic situation has lead to many commercial landlords suffering from a combination of being unable to find tenants and the restriction of empty rates relief for vacant properties. What amounts to occupation for rateable purposes has therefore become very important.

The case follows the earlier decision of Makro Properties Ltd v Nuneaton & Bedworth Borough Council [2012] EWHC 2250 which looked at the occupation of a very small percentage of a warehouse, concluding that too was occupation for rateable purposes.


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