Court of Appeal says box-shifting fails in business rates case

If you have never heard of 'box-shifting', you are not alone. It sounds minor, almost comic. But the government says this court ruling matters enough to write directly to chief finance officers at English billing authorities. That is because business rates are not just a line on a company balance sheet; they are part of how local government money is collected and counted. (gov.uk) On 3 September 2026, the Ministry of Housing, Communities and Local Government sent its seventh business rates information letter of the year to councils in England. The letter points them to a Court of Appeal decision in The Mayor and Commonalty and Citizens of the City of London v 48th Street Holdings Limited and another, and it says councils should be familiar with this change in case law. (gov.uk)

Here is the plain-English version of the scheme. Under the rules described in the Court of Appeal judgement, an empty commercial property gets an initial period of empty property relief for three months. After that, the owner usually becomes liable for business rates. At the time of this case, a fresh relief period could be triggered if the property was occupied again for at least six weeks; since 1 April 2024 in England, that reset period has been 13 weeks. (caselaw.nationalarchives.gov.uk) The scheme in this case involved placing boxes with redundant contents into an otherwise empty office for the old six-week reset period, then removing them and claiming a further three months of relief. The Court of Appeal judgement says the cycle could reduce overall liability by about two thirds. In the case summary, the court said the sole purpose of putting the boxes there was rate mitigation, not any real business use of the office. (caselaw.nationalarchives.gov.uk)

In July 2026, the Court of Appeal allowed the City of London's appeal and said this sort of box placement did not count as occupation for rating purposes. In other words, simply putting boxes into a vacant office is not enough if the whole exercise is only there to restart relief and cut the rates bill. The government letter then told councils that the attempt to secure repeated relief through this scheme had failed. (caselaw.nationalarchives.gov.uk) The judges relied on the Ramsay principle, which is a way of reading tax law by looking at what is really happening, not only at the paperwork wrapped around it. The Court of Appeal also overruled the earlier High Court decision in POLL v Trafford, which had treated the scheme as effective. For readers trying to make sense of the law, that is the key lesson: form still matters, but form on its own is not always enough. (caselaw.nationalarchives.gov.uk)

**What this means:** this is not a ruling that every short use of an empty property is fake. The judgement was dealing with what it described as a 'pure' rate-mitigation occupation scheme, where the boxes had no real commercial purpose beyond reducing the rates bill. That is a very different picture from a building being used for genuine storage, work or trade. (caselaw.nationalarchives.gov.uk) The court's reasoning also fits the wider aim of empty property rates. As the judgement explains, the rules are there to discourage owners from leaving premises vacant and to encourage them to bring empty buildings back into use. If owners could keep restarting relief by moving in boxes with no real purpose, that aim would be badly weakened. (caselaw.nationalarchives.gov.uk)

For councils, the message from government is direct. MHCLG says local authorities should now review box-shifting schemes, and other schemes where the supposed occupation exists to avoid rates, and withdraw relief where they conclude there is no real occupation. The department also says it is working with local government partners on litigation and other measures to help tackle rates avoidance. (gov.uk) For taxpayers, the public-interest point is easy to see. In the judgement, the court noted that permission to appeal had been granted partly because the scheme was said to be widely used. It recorded POLL's claim that it had saved clients more than £500 million, while the City of London said the scheme and similar versions were costing it £35 million a year in lost revenue. Those are not small sums; they are the kind of figures that shape what councils can and cannot afford. (caselaw.nationalarchives.gov.uk)

The same government letter also carries a quieter but important reminder. A 2025-26 New Burdens Assessment data collection was issued on the DELTA platform on 21 August 2026 and remains live until 18 September 2026. That part is for councils, not landlords, but it matters because it is about the cost of administering change. (gov.uk) In earlier business rates guidance, MHCLG said New Burdens funding is used when policy changes place extra software, staffing and administrative costs on billing authorities. So the letter is doing two jobs at once: closing down one avoidance route after the Court of Appeal ruling, and checking what extra work local authorities are being asked to carry. If you are trying to understand why this story matters, that is the final piece: it is about legal substance, public money and who picks up the admin bill when the rules shift. (gov.uk)