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Business & Finance

Court of Appeal rules against 'box shifting' business rates avoidance scheme

A landmark UK ruling has closed a prominent tax loophole that allowed commercial landlords to exploit empty property relief.

Updated Aug 31, 2026 · 12:19 UTC1 reports

The short version

  • The Court of Appeal has ruled against a commercial property tax avoidance scheme known as 'box shifting,' declaring that occupying a space solely to save on business rates does not qualify as valid occupation under the statutory scheme.
  • The legal battle was led by the City of London Corporation against Virgin Islands-based 48th Street Holdings Ltd and rate mitigation service provider Principled Offsite Logistics Ltd (POLL).
  • The practice of 'box shifting' has historically cost local UK authorities an estimated £1 billion to £1.5 billion in lost public revenues.

Key facts

  • The City of London Corporation brought the legal challenge against 48th Street Holdings Ltd and rate mitigation provider Principled Offsite Logistics Ltd (POLL) over a lease at 2 America Square.[The Guardian]
  • The Court of Appeal overturned a previous high court ruling, with Lady Justice Falk deciding that occupation solely for the sake of rate savings does not amount to occupation under the statutory scheme.[The Guardian]
  • POLL was refused permission to appeal to the Supreme Court by the Court of Appeal, but it retains the option to apply directly to the Supreme Court.[The Guardian]
  • Under the box-shifting scheme, companies placed empty boxes in vacant properties for short periods to repeatedly reset three-month business rate holidays, reducing rates owed by up to 67%.[The Guardian]
  • POLL is co-owned by North Hertfordshire Labour councillor Sarah Lucas, who serves as vice-chair of the council's finance, audit, and risk committee.[The Guardian]

What remains uncertain

  • It is not yet known whether POLL will apply directly to the Supreme Court for permission to appeal the decision.[The Guardian]
  • It remains unclear what specific actions the UK government plans to take to further address the misuse of Empty Property Relief.[The Guardian]

Sources