Business Rates – Requirements for Beneficial Occupation

Author: Simon Hill
In: Bulletin Published: Sunday 08 July 2018


In R. (on the application of Principled Offsite Logistics Ltd) v Trafford Council [2018] EWHC 1687 (Admin) (‘POLL’), Kerr J determines whether beneficial occupation within National Non-Domestic Rates Law requires a purpose beyond occupation for its own sake.

The leading case on what is meant by ‘rateable occupation’ for the purposes of National Non-Domestic Rates (‘Business Rates’) is John Laing & Sons Ltd v. Kingswood Area Assessment Committee [1948] 1 KB 344 (‘Laing'), where Tuckley LJ set down that there are ‘four necessary ingredients in rateable occupation’, at page 350. There must be: (i) ‘actual occupation’; (ii) ‘it must be exclusive for the particular purposes of the possessor’; (iii) ‘the possession must be of some value or benefit to the possessor’; and (iv) ‘the possession must not be for too transient a period’.[1]

The POLL case centred around the meaning of the third ingredient/element, (iii) ‘the possession must be of some value or benefit to the possessor’.  The issue that arose for determination was whether ‘occupancy for its own sake, in furtherance of a rates avoidance scheme’ (paragraph 116) could satisfy this ingredient/element. Kerr J posed the question, at paragraph 123: ‘Is the third element – that possession is of some value or benefit to the possessor - present where the value or benefit is the occupancy itself? That is the question to be decided.’ Or conversely, must there be some additional ‘…purpose or motive beyond that of the occupation itself’ (paragraph 125).


As Kerr J summarized, at paragraph 5, POLL contended on this third element, that the ‘touchstone of occupation is volition: the exercise of the will to occupy the premises’, while the billing authority, Trafford, contended that ‘…occupation for its own sake, without any separate purpose than to occupy, is not occupation in law and fact. There must be some additional purpose to use the premises for something.’ In respect to POLL’s method of occupying premises/hereditaments through storage of goods in the premises, Kerr J noted, at paragraphs 80-83, and 85:

While Trafford accepts that storage of goods for an independent commercial purpose, as in Makro, amounts to rateable occupation, it does not accept that the mere presence of POLL’s goods for the sake of populating the premises for rates mitigation purposes, can be rateable occupation. [Counsel for POLL’s]  submission is that placing goods in a property to occupy it is beneficial occupation; the act of volition is the hallmark of occupation.

[Counsel for POLL] submitted that the purpose of occupying a property need not be commercial to constitute rateable occupation. A whimsical eccentric who placed valueless items in a property for no discernible reason, purely as a hobby, would still be a rateable occupier of the property. The occupier has by volition performed the act of populating the property with things, which is enough for occupation.

The motive of the occupier is irrelevant, said [Counsel for POLL]. If motive becomes the subject of the law’s enquiry, the exercise becomes one laden with value judgments, such as a judgment that rates mitigation is not a “legitimate” commercial purpose, or that occupation must be the “right kind of occupation”. The court must remember to act as a court of law not morals.

Nor is the value of what is at the property relevant; an occupier may put in spartan furnishings or none, or goods of value or of no value. Conversely, an eccentric ex-occupier who leaves behind abandoned property may cease to occupy even if what he leaves behind is a priceless Picasso painting. In each case, the determining feature is the will of the person entitled to possession.

…POLL’s occupation is obviously, to POLL’s business, a “thing of value”…’[2]


While approaching the central issue, Kerr J firstly concluded that the previous authorities do not cover the point; it simply had not come up in the previous authorities whether occupation for its own sake, in furtherance of a rates avoidance scheme, could be beneficial. Secondly, he reminded himself that the meaning and effect of documents, and the general law, ought not to be distorted or manipulated in the name of morality, in order to prevent a tax avoidance scheme working. The analysis should be morally neutral. Kerr J said, at paragraphs 118 and 119: 

‘The modern cases on rates avoidance schemes – such as Makro, PAG Management Services Ltd and Rossendale  – stand for the proposition that where transactions are genuine and mean what they say, their meaning and effect, and the general law, must not be distorted or manipulated in the name of morality, so as to prevent avoidance of rates in circumstances where the statutory provisions provide for no rates to be payable.

Those cases are of some help because they remind me to guard against any moral dimension in the search for the nature of occupation that is “beneficial”. … I must resist any temptation to find that the occupation has to be of “the right kind” to qualify as beneficial. But the occupation still has to be beneficial, in law and in fact, applying a morally neutral analysis.’[3]

Thirdly, as a wider point, and putting aside any temptation to distort the law for ethical or moral imperatives, the law is that a semblance of occupation will not amount to occupation for the purposes of this third ingredient/element (and vice versa, in respect to a semblance of non-occupation). Kerr J said, at paragraphs 120 and 121: 

‘…without making any value judgment or descending into ethics or morality, there can in principle be a semblance of occupation where in truth there is none; just as, conversely, there can be a semblance of non-occupation where in truth there is occupation. An example of the latter is Melladew.’

An example of the former would be, for example, placing a scarecrow or dummy in the window of a house uninhabited and deserted by humans, intending to deceive observers into thinking the house was lived in. The motive might be merely to deter burglars pending a sale, if and when a buyer could be found. But the house would no more be occupied than was Mr Holland’s in Minister of Transport v. Holland’

The reference to Melladew is to R v Melladew [1907] 1 KB 192 (‘Melladrew’), where the Court of Appeal established that an occupier of potentially profitable commercial property did not cease to occupy it by absenting himself from the property, having left it in a state suitable for resumed profitable use should he return. 

In Minister of Transport v. Holland (1962) 14 P&CR 259 (‘Holland’), a compulsory purchase scheme case, an owner claimed to be in occupation in order to gain entitlement to be bought out at a proper price. The issue was whether he was in occupation. Kerr J drew from Holland, at paragraph 57, that the owner’s:

‘…occasional visits and maintenance work to prepare the property for sale, and the presence of inconsequential chattels left in sheds, were insufficient to amount to occupation.

Fourthly, Kerr J defined the occupation exhibited in POLL by the putative occupier/ratepayer, and the purpose of any such occupation. At paragraph 122, Kerr J said:

‘In the present case, the business of the putative occupier is the business of occupation. The purpose of the occupation is not to store goods; it is, so to speak, to plant the occupier’s flag; to populate the premises to whatever extent is required to occupy it in law and fact. The reason why that is done – the motive, if you prefer – is rates avoidance for the landlord, but the morality of that is neither here nor there.’

Having made those 4 points, Kerr J then turned to the central question for determination - Is the third element – that possession is of some value or benefit to the possessor - present where the value or benefit is the occupancy itself? Were POLL’s contentions correct, that the billing authority laid a complaint on an ‘incorrect understanding of beneficial occupation’ (paragraph 113). At paragraph 124 to 125, Kerr J stated:

‘Having reflected on this, I cannot see any good reason why, if ethics and morality are excluded from the discussion, the thing of value to the possessor should not be the occupancy itself. The verb “occupy” and the nouns “occupation”, “occupancy” and “occupier” are, in the end, ordinary English words. Their meaning has developed in case law to give them a sensible construction, but they have not been given technical statutory definitions.

I prefer the submissions of POLL to those of Trafford because they better fit the ordinary meaning of occupation. I find no concept within the meaning of the word requiring a purpose or motive beyond that of the occupation itself. The question is in each case whether the four elements in the JS Laing case are present. The third is sufficiently present where the intention is to occupy for reward, without any further commercial or other purpose.’


The POLL case clarifies the law, determining that beneficial occupation, the third ingredient/element of 'rateable occupation' articulated in Laing, does not require the putative occupuer/ratepayer to hold a purpose or motive beyond that of the occupation itself. Occupation can be for its own sake. So long as there is a volition to occupy - the exercise of the will to occupy, there is no wider purpose or motive that must be held. An intention to occupy for reward is sufficient, notwithstanding that the benefit may derive from a tax avoidance scheme. Should Parliament disagree with this interpretation of the law, it is of course at liberty to legislate further in this area. 




NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.

[1]The case of John Laing & Sons Ltd v. Kingswood Area Assessment Committee [1948] 1 KB 344, precedes the Local Government Finance Act 1988 but the preceding law on occupation applies by virtue of section 65(2) of the Local Government Finance Act 1988. Because section 65(2) is subject to the rest of the provisions in section 65, section 65 is written out in full:

65.— Owners and occupiers.

(1) The owner of a hereditament or land is the person entitled to possession of it.

(2) Whether a hereditament or land is occupied, and who is the occupier, shall be determined by reference to the rules which would have applied for the purposes of the 1967 Act had this Act not been passed (ignoring any express statutory rules such as those in sections 24 and 46A of that Act).

(3) Subsections (1) and (2) above shall have effect subject to [the following provisions of this section] 1 .

(4) Regulations under section 64(3) above may include rules for ascertaining—

(a) whether the different hereditaments or the one hereditament (as the case may be) shall be treated as occupied or unoccupied;

(b) who shall be treated as the owner or occupier of the different hereditaments or the one hereditament (as the case may be).

(5) A hereditament which is not in use shall be treated as unoccupied if (apart from this subsection) it would be treated as occupied by reason only of there being kept in or on the hereditament plant, machinery or equipment—

(a) which was used in or on the hereditament when it was last in use, or

(b) which is intended for use in or on the hereditament.

(6) A hereditament shall be treated as unoccupied if (apart from this subsection) it would be treated as occupied by reason only of—

(a) the use of it for the holding of public meetings in furtherance of a person's candidature at a parliamentary or local government election, or

(b) if it is a house, the use of a room in it by a returning officer for the purpose of taking the poll in a parliamentary or local government election.

(7) In subsection (6) above “returning officer” shall be construed in accordance with section 24 or 35 of the Representation of the People Act 1983 (as the case may be).

(8) A right which is a hereditament by virtue of section 64(2) above shall be treated as occupied by the person for the time being entitled to the right.

(8A) In a case where—

(a) land consisting of a hereditament is used (permanently or temporarily) for the exhibition of advertisements or for the erection of a structure used for the exhibition of advertisements,

(b) section 64(2) above does not apply, and

(c) apart from this subsection, the hereditament is not occupied, the hereditament shall be treated as occupied by the person permitting it to be so used or, if that person cannot be ascertained, its owner.'

[2]The reference to Makro is a reference to Makro Properties Ltd v. Nuneaton & Bedworth BC [2012] EWHC 2250 (Admin).

[3]The reference to PAG Management Services Ltd is a reference to Secretary of State for Business Innovation and Skills v. PAG Management Services Ltd [2015 EWHC 2404 (Ch), and the reference to Rossendale is a reference to Rossendale BC v. Hurstwood Properties (A) Ltd [2017] EWHC 3461 (Ch).