Companies with empty property which come into dispute with their local authority about empty property rate relief might take note of two recent and separate court rulings in which the courts both found in favour of the businesses.

Philip Rowland, solicitor at Adams & Remers, said: “Under the Rating (Empty Property) Act 2007 if property has been empty for more than three months (six in the case of industrial property) it no longer receives the tax relief but instead is liable for 100% of the basic occupied business rate. Local authorities are increasingly taking a hard line approach to how this relief is applied.”

“The Act also states that if a property is occupied again for a period of more than six weeks before becoming empty again, a further three or six month exemption will apply. In these cases the local authorities argued unsuccessfully that the properties had not been occupied again and that a further period of rates exemption would not apply.

“The ruling in these two cases could encourage owners of empty property to enter into temporary arrangements to minimise their rates liability but the cases show the aggressive approach now being taken by local authorities to protect their business rates revenue. I would urge anyone thinking of using this relief to ensure they fully meet the requirements and are not exposed to a claim by the local authority that previous periods of occupation were a sham.”

One of the cases involved a cash and carry business Makro which won a High Court appeal over the rates liability for its Coventry store.

Nuneaton and Bedworth Council accepted at the original Magistrates Court hearing that Makro had stored a proportion of its archived files at the Coventry location and these were of sufficient value, (a qualifying factor for the six month rate free period). But the Council argued that the volume stored did not justify the retention of the property and therefore it did not qualify for the second rate free six month period.

The magistrates court ruled that the degree of occupation by Makro was ‘de minimus’ and therefore did not amount to occupation which was successfully challenged.

The second case involved the Vale of Glamorgan council and a leisure client who had sub-let a property and claimed empty property relief when the clients moved out which was granted. The company marketed the property but was unable to break the lease or reduce the rent during which time it used the property for storage. When the business moved out again it applied for empty relief but this time it was rejected.

The district judge however ruled because there was a genuine effort on the part of the business to market the property, it should qualify for a number of reasons.

Philip Rowland added: “Local authorities are under pressure to recover finances owed to them however in both these cases there has been a sensible interpretation of the very complex rules which will be of help to other businesses in the future.”