The Court of Appeal has delivered a clear message to landlords: if you want to avoid business rates, you need real occupation, not clever paperwork.
In R (Emeraldshaw Ltd) v Sheffield Magistrates’ Court, Emeraldshaw attempted to shift business rates liability by granting a charity, Space to Help, a set of “tenancies at will”. On paper, the charity looked like the occupier. In reality, the premises were being redeveloped into four commercial units, with Emeraldshaw retaining day‑to‑day control.
Both the magistrates’ court and the High Court saw straight through the arrangement. And now the Court of Appeal has emphatically backed that view: liability depends on who genuinely possesses and controls the property, not who is named on a document.
The charity, the court said, had no practical ability to occupy, operate from, or meaningfully use the space. Emeraldshaw’s redevelopment activities made clear who really held the reins. As a result, the charity occupation argument collapsed, and the landlord remained firmly on the hook for business rates.
Why this matters
This judgment reinforces a hardening judicial approach to rates‑avoidance schemes dressed up as charitable occupation. The label on the agreement is almost irrelevant. What counts is substance:
- Who can actually use the property?
- Who can control access?
- Who can bring it back into active use?
If the answer is “the landlord”, then the liability is very likely to stay with the landlord, however creative the documentation.
The takeaway for landlords
Short‑term or nominal arrangements will be scrutinised for commercial reality, not clever drafting. If an occupier has no real operational role, the courts won’t hesitate to treat the arrangement as a fiction.
Landlords seeking to mitigate empty rates should therefore proceed with caution and ensure any occupation arrangement has genuine substance and occupation behind it.
If you require any advice or assistance in relation to business rates liability or property occupation arrangements, please do not hesitate to contact us.
