Business Rates - High Court sets out checklist for establishing rateable occupation

England and Wales

In an important Judgment the High Court has set out a “checklist” for district judges to follow when determining disputes about what constitutes “occupation” for business rates purposes. It has also suggested a protocol for determining such disputes. Parties who don’t follow the protocol may be penalised on costs.

In Public Health England v Harlow District Council [2021] EWHC 909 the High Court has helpfully set out a checklist of propositions of law to enable District Judges to determine disputes about what constitutes “occupation" of premises for non-domestic rating purposes. The propositions of law are as follows:

  • The possessor of the property had to be in actual occupation of the property, i.e. making some use of it.

  • The possession of the property had to be exclusive to the possessor; it should not be shared with another person also entitled to possession.

  • Voluntary use of a small proportion of the property to store a small amount of the possessor’s goods was sufficient.

  • It did not matter if the storage was whimsical or eccentric, for example storage of a collector’s items or of redundant items.

  • The possessor of the property had to have an intention to occupy the property, which could be inferred from use of the property.

  • It did not matter if the possessor’s predominant or sole motive was mitigation of, or exemption from, rates liability.

  • There was no occupation of a property where the person entitled to possession intended not to occupy it but to create a semblance or pretence of occupation.

  • The presence in the property of goods not worth the trouble of removing, which could be inferred to have been abandoned, was not sufficient for occupation.

  • It was not sufficient for occupation if the only use of the property was its upkeep and preservation or alterations in preparation for future occupied use.

  • The possessor of the property could be a professional contractor whose business was occupation, provided it had the right to exclusive possession.

  • The possession of the property must not be too transient; it must endure for more than a fleeting period of time.

  • Occupation could more readily be found too transient where the property was a temporary structure rather than a building for permanent use (see Annex A of the judgment).

The Court also set out a protocol for resolving disputes as to whether premises are occupied for business rates purposes. The protocol is as follows:

  • The parties should cooperate in making arrangements for inspection by the billing authority of the property and its contents.

  • An agreed list of the contents, with at least a generic description, should be produced and signed and dated by both parties, covering the material times.

  • The billing authority should write to the other party stating whether it considered the property to be occupied or not, and at what times or over what periods.

  • The billing authority should include in its written communication to the other party its reasons for its conclusions.

  • The billing authority should issue any consequent demand for payment of non-domestic rates in the normal way, in accordance with the rating legislation.

  • If the recipient of the demand disputed liability, it should write to the billing authority stating why.

  • The recipient should not pay the disputed amount with a view to claiming it back later, as that would deprive the magistrates’ court of jurisdiction.

  • Any disputed rates liability should be the subject of a summons for non-payment issued by the billing authority under the rates collection legislation.

  • The magistrates’ court could then determine whether and when a property was occupied or unoccupied and any consequent liability for non-domestic rates.

  • The unsuccessful party would then have a right of appeal to the Administrative Court, by case stated, with full findings of fact.

  • A party refusing to follow the procedures set out in this protocol might be subject to costs sanctions imposed by the magistrates’ court or any other court.

  • A party claiming restitution of non-domestic rates wrongly paid should sue in the ordinary courts and might not necessarily recover its costs, even if successful (Annex B).

IMPORTANT NOTE; The protocol says that a recipient of a disputed demand should NOT pay it with a view to claiming it back later as that deprives the magistrates’ court of jurisdiction to determine the dispute.