The box stops here: Is this the end of box-shifting rates mitigation?

For many years, so-called “box-shifting” arrangements have been a familiar feature of the business rates mitigation landscape, offering owners of vacant commercial properties a way to reduce exposure to empty rates.

However, a landmark Court of Appeal decision has fundamentally challenged the legitimacy of these schemes, potentially bringing an end to a long-established practice relied on across the property sector. The Court of Appeal's decision in City of London v 48th Street Holdings Ltd & Principled Offsite Logistics Ltd [2026] marks a significant development in business rates mitigation.

We examine the judgment, the reasoning behind the Court's decision and what it could mean for landlords and business rates strategies going forward.

The case concerned a widely used arrangement under which owners of vacant commercial properties granted a short lease to a third party, which then placed boxes containing redundant or low-value items in the premises for a brief period.

Once the boxes were removed, the owner claimed a fresh period of empty property rates relief, enabling the process to be repeated and substantially reducing rates liabilities.

The key issue was whether this temporary use amounted to “occupation” for rating purposes.

Although the High Court had previously upheld the arrangement following POLL v Trafford Council, the Court of Appeal disagreed and found that the scheme did not constitute genuine occupation within the meaning and purpose of the legislation.

A particularly important aspect of the case was that it was effectively accepted that the boxes served no meaningful commercial purpose. The contents were of little or no value and were not being stored for any genuine operational reason. Their presence was solely intended to create the appearance of occupation and secure further empty property relief. The court considered it highly significant that there was no independent commercial benefit arising from the occupation itself.

Central to the judgment was the requirement that occupation must provide some real utility, value or benefit to the occupier. The court found that the boxes had no meaningful storage or business function and that the claimed benefit was merely the rates relief itself. This created a circular argument: The occupation was said to be beneficial because it generated relief, while the relief depended upon there being valid occupation.

Accordingly, the Court held that “pure rate mitigation occupation” is not occupation for rating purposes and expressly overruled POLL v Trafford.

The decision has potentially far-reaching consequences.

Property owners can no longer rely on traditional box-shifting schemes to reduce empty rates liabilities, and local authorities are likely to scrutinise similar arrangements much more closely. Existing mitigation structures based on artificial or short-term occupation may now be vulnerable to challenge along with previously accepted schemes, increasing costs for landlords with vacant properties.

Where a property is genuinely occupied, for example for archive storage or other legitimate business purposes, the decision is unlikely to prevent relief being claimed. However, the facts of each case will remain important. Going forward, local authorities are likely to focus on the genuine business purpose of the occupation rather than the mechanics of the arrangement.

While the Court of Appeal’s decision appears to be a decisive blow to traditional box-shifting schemes, it is unlikely to be the final chapter. Given the scale of the business rates liabilities at stake and the widespread use of these arrangements across the commercial property sector, there is a realistic prospect that permission to appeal to the Supreme Court will be sought.

In the meantime, local authorities may feel encouraged to challenge existing mitigation arrangements that rely on short-term or artificial occupation. The judgment is also likely to lead to greater scrutiny of occupation-based schemes more generally, with increased focus on whether the occupation delivers a genuine commercial benefit beyond the achievement of rates relief.

Landlords, property owners and rates mitigation providers should expect closer examination of arrangements that may previously have been considered relatively low-risk.

Whether the Court of Appeal has finally brought an end to box-shifting rates mitigation remains to be seen. However, the judgment has undoubtedly raised the bar for demonstrating genuine occupation and, for many schemes, the box may well have stopped here.

Approval code: NTRC082645