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Court of Appeal ruling welcomed by empty property landlords

11th September 2019

Court of Appeal ruling welcomed by empty property landlords

Local authorities are potentially set to lose millions of pounds as landlords and businesses seek to legally employ business rates avoidance schemes.

Following a test case at the Court of Appeal, Rossendale Borough Council and Wigan Council v Hurstwood Properties Ltd and Property Alliance Group Ltd (2019), both authorities failed in their legal bid to recover business rates on empty properties.

As a result, other authorities across the country who find themselves involved in similar pending cases may now miss out on more than £10million in unclaimable business rates on the empty properties in their district.

The test cases highlighted two incidences of leases being granted to special purpose vehicle companies (SPVs). The SPVs would subsequently be struck off or voluntarily liquidated and dissolved, but crucially, the liability for business rates was held not to return to the landlord.

Peter Humpherson, a property litigation specialist at Higgs & Sons, said that while local authorities may consider themselves out of pockets, landlords were likely to welcome the judgment from His Honour Judge Hodge QC.

“While each case will turn on its own facts, in these cases, the use of SPVs to mitigate the cost of business rates on the empty properties was perfectly legal,” said Peter.

“And while the local councils in both of these test cases sought to have SPVs declared a ‘sham’, the landlords were successful in having that allegation dismissed.

“It remains to be seen, however, whether the local authorities in question will attempt to overturn the decision in the Supreme Court.”

Peter is an experienced commercial property litigator and is happy to offer practical advice as to how disputes may be decided by the Court. Contact him or a member of the Higgs & Sons team on 0345 111 5050.

 

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