Packing up rate mitigation – The end of ‘box shifting’?

The recent case of The Mayor and Commonalty and Citizens of the City of London v 48^th Street Holdings and another [2026] EWCA Civ 970 concerned intermittent occupation in the form of ‘box shifting’, where tenants store worthless items in a space on a short term lease.

The law

There is an exemption from non-domestic rates (NDR) for the first three months after non-domestic premises become unoccupied. After the three-month period, the owner becomes liable to NDR in full.

However, if the premises are occupied for a set period (currently thirteen weeks, but previously six weeks), the three-month period can be reset when the premises become empty again.

The facts

In this case, once the premises had been unoccupied for three months, Principled Office Logistics (POLL) would be granted a six-month lease as the tenant, for a peppercorn rent.

Under separate contractual terms, the premises owner would pay POLL a fee equal to a percentage of the savings under the scheme, refundable if the scheme was ineffective. In addition, the premises owner would pay the utilities, and a non-refundable fee equal to the NDR incurred by POLL during their occupation of the premises.

At the same time, a break notice would be served terminating the lease after six weeks (the previous occupation threshold).

POLL would then place boxes in the premises for the duration of the six weeks, fulfilling the definition of ‘occupation’ and accepting liability for NDR.

At the end of the six weeks, the lease would terminate and the boxes would be removed.

The premises would then be left unoccupied for three months, at which point the cycle could be repeated.

The judgment

The Court of Appeal ruled that s45(1) of the Local Government Finance Act 1988 and 4(a) and (b) and 5 of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 do not have the effect that placement of items in an otherwise unoccupied premises amounts to occupation, if the sole aim of doing so was to generate occupation for the purposes of those provisions, with no commercial or business aim except for rate mitigation.

It was held that the legislature cannot sensibly be taken to have intended to allow the practice of box shifting to constitute occupation. Considering the requirement for there to be ‘beneficial occupation’, pure rate mitigation occupation had no utility, value or benefit independent of the scheme itself, and that rate saving benefit was conditional on future events.

The Court of Appeal emphasised that the judgment was specific to the pure rate mitigation scheme described above.

What next?

Going forward, landlords should be aware that this outcome does not appear to completely nullify the use of rate mitigation schemes. Where a genuine use of space can be proven, such schemes may still be effective.

There remains the prospect that the case will advance to the Supreme Court in the future, or that the relevant legislation will be changed.

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