Tax Avoidance – the lawful avoidance or reduction of tax by arranging one’s affairs in order to minimise the amount of tax payable

“I am not prepared to hold as a matter of law that the magistrates were not entitled thus to relegate these objects to a lowly grade of value or importance”

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“I am not prepared to hold as a matter of law that the magistrates were not entitled thus to relegate these objects to a lowly grade of value or importance”

LGFA 1988 s 65(5) - “Plant, machinery and equipment….which was used…. or is intended for use…” can be ignored

LGFA 1988 s 65(5) - “Plant, machinery and equipment….which was used…. or is intended for use…” can be ignored
Sheafbank Property Trust PLC v Sheffield MDC 1988
A disused sports ground and premises was held to be unoccupied because it only contained plant, machinery and equipment that were last used on the premises
Items included a snooker table, music facilities, tables, chairs, the bar and associated equipment, freezer, dishwasher, kitchen items, TV, refrigerator, settee, grass cutting equipment

Makro Properties Ltd and Makro Self Service Wholesalers Ltd v Nuneaton and Bedworth BC 2012

Makro Properties Ltd and Makro Self Service Wholesalers Ltd v Nuneaton and Bedworth BC 2012
Decision given on 29 June 2012
Appeal by case stated against liability order granted in the Magistrates’ Court on 14 April 2011
Former cash and carry warehouse used for temporary storage
Rowleys Green, Coventry
0.2% of floor space of 140,000 sq.ft.
Storing 16 pallets of documents
Between November 2009 and January 2010
Sufficient to trigger a further 6 months rate free period

Two questions for the opinion of the High Court

Two questions for the opinion of the High Court
Whether on the facts found by the court about the level, purpose and benefit to the ratepayer of the storage occurring on the hereditament, the court was correct to decide that the hereditament was not in rateable occupation between 25 November 2009 and 12 January 2010 and after 23 July 2010.
In the event that the court was not correct so to decide, whether the court was correct to consider (a) that rateable occupation would continue throughout the period 12 January 2010 to 23 July 2010 and (b) that the occupier would be Makro Properties Limited

Makro Properties Ltd (MPL) was the freeholder

Makro Properties Ltd (MPL) was the freeholder
Makro Self Service Wholesalers Ltd (MSSWL) held a lease until 31 December 2009
Both part of the Makro Group Ltd
MSSWL occupied as a self service warehouse until 1 June 2009 when it was cleared and vacated
MSSWL stored 16 pallets of company paperwork which it was obliged by law to retain, between 25 November 2009 and 12 January 2010
Occupied 0.2% of over 13,000 sq. metres (140,000 sq. feet)

After the surrender of the lease there was an informal intra-group permission but no written agreement

After the surrender of the lease there was an informal intra-group permission but no written agreement
Premises empty between 12 January and 23 July 2010
Intention to sell but a reserve plan to reoccupy to a minor degree for a short period
40 pallets of MSSWL paperwork were delivered on 23 July 2010
17 pallets removed on 17 August 2010
Up to 60 pallets delivered on 21 September 2010
Rates were paid for the periods of occupation

The billing authority charged empty rates from 1 December 2009 and obtained liability orders.

The billing authority charged empty rates from 1 December 2009 and obtained liability orders.
The District Judge in the Magistrates’ Court accepted that only part needed to be used and that the determining factor was whether the goods were of value
The High Court referred extensively to the case law
District Judge accepted that the goods were of value but considered “de minimis” and decided 0.2% did not amount to actual occupation
Concluded that there was no benefit other than avoiding empty rate and applied the principle in Furniss v Dawson that the steps had no business value other than avoiding empty rate

On appeal the Council submitted that the intention found in this case was to give a “semblance” of occupation

On appeal the Council submitted that the intention found in this case was to give a “semblance” of occupation
Mr Glover QC (for Makro) observed that the state of mind may more properly be described as motivation rather than intention
Judge Jarman did not accept the Council’s submission finding that it “necessarily included an intention to occupy and not just give a semblance of occupation”
Judge Jarman went on to dismiss the district judge’s reliance on Furniss v Dawson which concerned financial transactions, stating “that principle in my judgement is of no assistance in considering the question of intention in this case”

The district judge had accepted there was actual occupation, but argued that it was “de minimis”

The district judge had accepted there was actual occupation, but argued that it was “de minimis”
Judge Jarman examined this in some detail
Judge Jarman considered that the proper approach was to consider both use and intention
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Tax Avoidance – the lawful avoidance or reduction of tax by arranging one’s affairs in order to minimise the amount of tax payable

“I am not prepared to hold as a matter of law that the magistrates were not entitled thus to relegate these objects to a lowly grade of value or importance”

“I am not prepared to hold as a matter of law that the magistrates were not entitled thus to relegate these objects to a lowly grade of value or importance”

LGFA 1988 s 65(5) - “Plant, machinery and equipment….which was used…. or is intended for use…” can be ignored

LGFA 1988 s 65(5) - “Plant, machinery and equipment….which was used…. or is intended for use…” can be ignored

Sheafbank Property Trust PLC v Sheffield MDC 1988

A disused sports ground and premises was held to be unoccupied because it only contained plant, machinery and equipment that were last used on the premises

Items included a snooker table, music facilities, tables, chairs, the bar and associated equipment, freezer, dishwasher, kitchen items, TV, refrigerator, settee, grass cutting equipment

Makro Properties Ltd and Makro Self Service Wholesalers Ltd v Nuneaton and Bedworth BC 2012

Makro Properties Ltd and Makro Self Service Wholesalers Ltd v Nuneaton and Bedworth BC 2012

Decision given on 29 June 2012

Appeal by case stated against liability order granted in the Magistrates’ Court on 14 April 2011

Former cash and carry warehouse used for temporary storage

Rowleys Green, Coventry

0.2% of floor space of 140,000 sq.ft.

Storing 16 pallets of documents

Between November 2009 and January 2010

Sufficient to trigger a further 6 months rate free period

Two questions for the opinion of the High Court

Two questions for the opinion of the High Court

Whether on the facts found by the court about the level, purpose and benefit to the ratepayer of the storage occurring on the hereditament, the court was correct to decide that the hereditament was not in rateable occupation between 25 November 2009 and 12 January 2010 and after 23 July 2010.

In the event that the court was not correct so to decide, whether the court was correct to consider (a) that rateable occupation would continue throughout the period 12 January 2010 to 23 July 2010 and (b) that the occupier would be Makro Properties Limited

Makro Properties Ltd (MPL) was the freeholder

Makro Properties Ltd (MPL) was the freeholder

Makro Self Service Wholesalers Ltd (MSSWL) held a lease until 31 December 2009

Both part of the Makro Group Ltd

MSSWL occupied as a self service warehouse until 1 June 2009 when it was cleared and vacated

MSSWL stored 16 pallets of company paperwork which it was obliged by law to retain, between 25 November 2009 and 12 January 2010

Occupied 0.2% of over 13,000 sq. metres (140,000 sq. feet)

After the surrender of the lease there was an informal intra-group permission but no written agreement

After the surrender of the lease there was an informal intra-group permission but no written agreement

Premises empty between 12 January and 23 July 2010

Intention to sell but a reserve plan to reoccupy to a minor degree for a short period

40 pallets of MSSWL paperwork were delivered on 23 July 2010

17 pallets removed on 17 August 2010

Up to 60 pallets delivered on 21 September 2010

Rates were paid for the periods of occupation

The billing authority charged empty rates from 1 December 2009 and obtained liability orders.

The billing authority charged empty rates from 1 December 2009 and obtained liability orders.

The District Judge in the Magistrates’ Court accepted that only part needed to be used and that the determining factor was whether the goods were of value

The High Court referred extensively to the case law

District Judge accepted that the goods were of value but considered “de minimis” and decided 0.2% did not amount to actual occupation

Concluded that there was no benefit other than avoiding empty rate and applied the principle in Furniss v Dawson that the steps had no business value other than avoiding empty rate

On appeal the Council submitted that the intention found in this case was to give a “semblance” of occupation

On appeal the Council submitted that the intention found in this case was to give a “semblance” of occupation

Mr Glover QC (for Makro) observed that the state of mind may more properly be described as motivation rather than intention

Judge Jarman did not accept the Council’s submission finding that it “necessarily included an intention to occupy and not just give a semblance of occupation”

Judge Jarman went on to dismiss the district judge’s reliance on Furniss v Dawson which concerned financial transactions, stating “that principle in my judgement is of no assistance in considering the question of intention in this case”

The district judge had accepted there was actual occupation, but argued that it was “de minimis”

The district judge had accepted there was actual occupation, but argued that it was “de minimis”

Judge Jarman examined this in some detail

Judge Jarman considered that the proper approach was to consider both use and intention