Snail farms and other slow moving business (rates mitigation schemes)
min readWhilst you might be forgiven for thinking the recent Supreme Court case of Hurstwood v Rosendale [2019] involves snails, given the amount of time it is taking the Court to issue its decision, the case involving snails was in fact the recent High Court decision in Isle Investments v Leeds City Council [2021] EWHC 345 (on appeal from Leeds Magistrates’ Court). This case involved a rates mitigation arrangement where leases were granted for 21 weeks at a nominal rent.
A number of the leases included a user restriction requiring the properties concerned to be used for the purposes of snail farming. The properties were offices and so the tenant could not have operated a snail farm from them. This meant the leases allowed no legitimate business to take place. In subsequent leases the permitted use provision was replaced with a restriction to use the property for the purposes of property management or marketing but Mr Justice Fordham ultimately held that the owner had dishonestly entered into “sham” leases with the sole purpose of avoiding business rates. He found that there was never an intention for the tenant to go into occupation or for the tenant to give effect to the rights the leases purported to create.
This is a rare victory for local authorities in the recent case-law relating to business rates mitigation schemes and perhaps suggests a change in the wind as we await the decision in Hurstwood v Rosendale.
