10 Practical Tips For Dealing With Potential Rates Avoidance

Image: Joel Filipe/joelfilip/Unsplash
Image: Joel Filipe/joelfilip/Unsplash

Setting up a new account

It should no longer be the case that you accept a simple email or phone call to change the liable party for rates on a property. Increased scrutiny of the information provided at the beginning of any period of occupation should lead to increased rates of recovery. A local authority has a statutory duty to collect business rates, and it is reasonable in the execution of that duty to seek documentary evidence of the existence of a party and its right to occupy at the outset. This ought to include a copy of the lease or licence, as well as written confirmation from a director of the occupying company, preferably on their letterhead. It is important to adopt a uniform approach with all new accounts.

No payment received?

If you have any doubt over the existence of the occupying party, seek further information from the landlord. This might include:

  • arranging an inspection to check occupation (with photos if possible)
  • proof that rent payments have been made, or details of any action taken regarding unpaid rent
  • who is responsible for the utilities
  • what insurance has been arranged on the property (e.g. public liability insurance)
  • checking with agents if the property has been on the market for sale or to let during the lease
  • check the lease carefully for any obvious issues such as lack of exclusive occupation.

The case of Augustine Housing Trust v Grays Magistrates’ Court [2011] is a useful one to quote and held that councils are entitled to ask for such documentation as they think is necessary to assist in making a decision on relief, such as audited accounts, etc. The case applied to an application for charitable relief but in our view may also be applied to considerations of liability.

Property occupied by someone

If a property has been occupied further investigation will be needed. This might include:

  • asking occupiers for proof of trading from the premises such as bank statements (showing takings etc.)
  • PAYE or VAT registration
  • utilities and public liability insurance.

Also remember to consider whether there might be paramount control issues at the properties. Does the head tenant retain the keys and have regular access to the premises?

Enforcement agents

Enforcement agents are often frustrated with representations that goods or assets on the premises are owned by third parties. For example finance companies or sale or return stock arrangements. Put pressure on the enforcement agents to insist on evidence of this failing which goods ought to be levied on. For a trading business, the enforcement agents still represent the best opportunity for collection, and it should be up to the occupier to prove that any goods do not belong to them.

Burden of proof

Once you have raised unpaid bills to a party, the burden of proof swings to that party to show why they may not be liable. The case of Pall Mall Investments v London Borough of Camden [2013] provides a useful summary and guidance on the burden of proof that will affect the parties. It is often the case that parties will refuse to co-operate or substantiate their position considering it the job of the local authority to investigate the matter. From the case of Radford v North Haven District Council [1987] “The burden [of proof] then falls on the Respondent to show sufficient cause for not having paid the sum demanded. The question where a person appears to be in occupation of a particular property is in actual occupation of it will be peculiarly within his knowledge”.

And from Westminster v Tomlin [1990] “The rating authority cannot know the full circumstances surrounding each rateable property and its area, and if the property established that prima facie case that the rates have been properly demanded and not paid, the burden of proof then shifts to the Respondent of the summons to appeal and show for one reason or another why he has not paid”.

Makro schemes

For intermittent occupation schemes (more commonly known as Makro schemes) the courts have not given blanket approval for their operations. It is up to the occupier in each case to prove rateable occupation. The court held in the Makro case that slight use coupled with intention may amount to actual occupation. Beneficial occupation does not simply mean goods belonging to the owner. They ought to be put to proof as to what the actual benefit may be. It is suggested that it is perfectly reasonable for an authority to request the following documentation in order to consider whether there has been rateable occupation during the period concerned:

  • Any commercial agreement between the landlord and tenant (occupancy may not derive from the tenancy agreement alone).
  • Tenancy agreement (if third party occupant).
  • Storage agreements.
  • Delivery/collection notes.
  • Any photographs taken on delivery of collection showing goods in situ.
  • Invoices for items stored for the relevant periods.
  • Any documentation evidencing how the tenancy agreement was surrendered.

Legal costs

When considering challenging potential rates avoidance, remember the costs position is very favourable to councils, such as the case of Bradford v Booth. As long as you have acted reasonably in fulfilling your statutory duty, the council ought not to be penalised on costs just because it was ultimately unsuccessful in obtaining a liability order. Taking on and challenging avoidance will vastly improve the council’s reputation in the business community and this in itself can lead to reduced avoidance attempts.


Dealing with charities occupying otherwise empty properties remains a challenge. There is nothing wrong with the landlord entering into a lease with a charity simply for the purposes of reducing his rates liabilities. In the vast majority of cases therefore liability remains with the charity and it is a matter of deciding whether they are entitled to the relief sought. A consistent approach is required across all charitable or relief applications to avoid any allegations of unfair treatment.

Empty Charitable Relief

Unoccupied relief is normally sought on the basis of the occasional day’s occupation here or there to demonstrate that when next in use it will be mainly charitable. The following considerations may be useful:

  • Does the charity have a business plan setting out its intended occupation?
  • The charity must occupy the site “wholly or mainly” for the days in question.
  • Occupation must be for at least 24 hours (we have seen some charities set up between 10.00am and 4.00pm claiming the relief).
  • Fundraising does not attract relief – is raising awareness fundraising?
  • Is getting a kickback from the landlord fundraising?
  • Inspection and photos are always helpful to illustrate the exact nature of the occupation if the matter comes to court.
  • Always remember that just because you do not like the use of relief being used in this way, does not mean that the charity is not entitled to it. If the statutory test is satisfied, then you will have to grant the relief.

Service on an unincorporated trust

When dealing with an unincorporated association or trust charity be careful on service of the summons. Regulation 13(2)(b) of the 1989 Enforcement Regs only refer to service of a “company” at its registered office so therefore service of the summons will have to be arranged on the trustees personally, and those trustees traced if their home addresses are not available on the charity’s website.

Greenhalgh Kerr
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Smithy Brook Rd,
Wigan WN3 6PR

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