[2025] EWHC 2336 (Ch)

The historical background to the charging of NDR is set out in paragraphs 20 – 27 of the judgment of the Supreme Court in Rossendale.

“Rates were for centuries a charge on occupation rather than the ownership of land, but their rationale changed over time from poor relief to payment for the provision of local services... The charge affected all those in actual occupation, with or without title to occupy …The question whether property is occupied and, if so, who is the occupier for rating purposes is still largely governed by the common law rules: see section 65(2) of the 1988Act. The classic statement of those rules is that of Tucker LJ in John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344, 350, recently reaffirmed by this court in Cardtronics UK Ltd v Sykes (Valuation Officers) [2020] 1WLR 2184, para 13…Provision for levying rates on unoccupied property was first made by sections 20 to 22 of the Local Government Act 1966, and then in similar terms in the General Rate Act 1967…This reform was said to be necessary because the notion “that properties should remain empty and available for occupation for long periods in conditions of scarcity is an affront to all right-thinking people”. Making rates payable on empty property should also “reduce the present waste of accommodation” …In Hastings Borough Council v Tarmac Properties Ltd (1985) 83 LGR 629, 633Lawton LJ said that the mischief with which the relevant statutory provisions were intended to deal “can be clearly identified. Parliament wanted to stop the owners of premises … leaving them unoccupied to suit their own convenience and to their own financial advantage” …During the passage through Parliament of the Bill which became the 1988 Act the Government made it clear that it was not seeking to modify the justification underpinning the rates regime. When the Bill was considered in committee in the House of Lords, the Earl of Caithness (then Minister of State for the Environment whose department was responsible for the Bill) acknowledged that “historically, the purpose of empty property rating has been partly to reflect the fact that empty properties do benefit from some

local authority services - police, fire and so forth - and partly to encourage owners to bring empty property back into use” (Hansard (HL Debates), 9 June 1988, cols 1552—1553)…The thrust of the exceptions is to exclude properties where, for varying reasons, the owner either (i) may be unable to bring the property back into occupation, or (ii) may be regarded as having a reasonable excuse for not doing so, or (iii) may be making some other valuable contribution to society by being the owner, in lieu of paying rates…Thus, within the first of these categories, regulation 4(c) provides an exemption where occupying the property is unlawful. In the second category regulation 4(d) does so where property is kept vacant ahead of planned compulsory acquisition, and regulation 4(e) does so where the property is subject to a building preservation notice or listed as such. Regulation 4(h) to (m) exclude properties whose owner is an office holder, whether a personal representative, trustee in bankruptcy, liquidator or administrator, in each case subject to duties (e g to realise by sale) which will or may conflict with securing early occupation…”

The defendant submits that, as a matter of general principle, it would be wrong, as a matter of law, to apply any kind of moral judgment to the schemes for the avoidance of NDR presently under consideration, relying on several authorities including O’Neil v Inland Revenue Commissioner [2001] 1 WLR 1212, at [9], per Lord Hoffmann, who doubted the wisdom of using the concept of ‘impropriety’ in that case, which “suggests a moral judgment which their Lordships think is inappropriate and has been consistently repudiated in cases on tax avoidance schemes in England and New Zealand.” As the defendant submitted, after all, liability to tax (including NDR) depends on statutory construction and not moral disapproval: McGuckian v Inland Revenue Commissioners [1997] 1 WLR 991, 997, per Lord Browne Wilkinson.

I accept this, and that it applies in the context of rates avoidance. The Supreme Court in Rossendale has in any case explained how the statutory provisions applicable in the present case fall to be construed, as we shall see below.