[2025] EWHC 2336 (Ch)

Reg 5 of the 1989 Regulations require the demand notices to be served as soon as practicable after the relevant dates. The defendant has identified the relevant dates for both Trafford and Wigan, and they appear not to be disputed. For Trafford, they lie between 28 January 2012 and 1 April 2015; for Wigan they lie between 23 May 2008 and 1 April 2013.

Evidently there is an interval of time between these dates and the dates upon which I have accepted demand notices were served.

The question is whether they were served as soon as practicable after the relevant dates. The claimants say they did not have the information to know to serve demand notices on PAG for some time, and when they did PAG directed them to the SPVs. Mr Mather accepted the claimants had not been told that PAG was using a rates mitigation scheme, was not told anything about those schemes, and was entitled to take at face value what they were told by PAG, and acted reasonably in doing so.

I accept that. The claimants were not told an NDR avoidance scheme was in operation. All they were told was that PAG had granted a lease to a company. It was not until sometime later that they were told that that company was in liquidation. In the case of Wigan, no liquidators were appointed, so Wigan was left to deal with the matter without any liquidator with whom to engage until 2011, when the SPVs were wound up on the petition of the Secretary of State. The liquidators of the SPVs concerned with Trafford asserted they were reviewing the leases to establish whether they held any value for the benefit of the liquidation, the lease had not been disclaimed, that the liquidators had been removed, and then in April 2013 that the companies were insolvent and would enter a new insolvency process. In my assessment, they were given the run around. I do not regard this as candid behaviour.

It was submitted for the defendant that it was always plain and obvious anyway that the scheme leases were granted as part of a liquidation NDR avoidance scheme. I do not accept this. Certainly, PAG never positively said they were not, but nor did it did let on that they were part of a scheme at all.

I accept the defendant’s submissions that the hallmarks of schemes 1 and 2 involved the following: empty properties; the grant of a lease of that property to a company; the company entering into liquidation at the same time as or shortly after the grant of a lease; and reliance on a statutory exemption from NDR. I accept, also, that it was not long after each of those events occurred that the relevant billing authority would have been aware of each of those facts. I do not accept that that simple awareness of each of those facts did in fact inform, or ought to have informed, the claimants that an NDR avoidance scheme had been employed, such that it was PAG, and not the SPVs, which was the proper recipient of demand notices (despite PAG’s asserting that it was not). It is not just a matter of knowing the identity of the person in rateable occupation. It is a matter of knowing on what basis NDR can be demanded. I therefore distinguish what was said in North Somerset District Council v Honda Motor Limited [2010] EWHC 1505 (QB) para [66].

That is all the more so where, as was accepted on behalf of the defendant, the basic factual elements would have been in the knowledge of only relatively junior employees who, I take it, would not have been qualified to recognise an NDR avoidance scheme even if, at a higher level, there may have been widespread awareness that such schemes existed to be deployed. For the avoidance of doubt, I do not regard that as an example of home-grown problems and inefficiencies rendering impracticable what would otherwise have been practicable in the sense employed in North Somerset District Council v Honda Motor Limited [2010] EWHC 1505 (QB) para [64].

I did not understand any of the witnesses called on behalf of the claimants actually to accept that it was or, in the circumstances which actually prevailed, ought to have been, blindingly obvious that a scheme was in use.

I take it that not immediately disclosing the deployment of a scheme was itself part of the scheme; and I am fortified in that conclusion by the consideration that scheme 3, with which this case is not concerned, included the novel development that the landlord explained to the council transparently that a scheme was being used, and did so because Norris J had identified a lack of transparency as “an issue” in the case mentioned above.

Accordingly, I consider that the demand notices were sent as soon as practicable after the relevant dates.