Property owners used schemes under which special purpose vehicles took short leases of empty properties and became liable for non-domestic rates. Local authorities challenged the schemes and sought unpaid rates.
Selected cases
UK Supreme Court · [2021] UKSC 16
Hurstwood Properties v Rossendale Borough Council
The UK Supreme Court considered business rates avoidance schemes involving special purpose vehicles.
UK Supreme Court14 May 2021
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Quick read
- Aggressive tax or rates planning can fail even when the documents look technically clever.
- The UK Supreme Court considered business rates avoidance schemes involving special purpose vehicles.
Use this to check
- Be cautious with rates avoidance products
- Ask what commercial purpose sits behind each step
- Keep board approval clear where tax or rates planning is material
Decision snapshot
What happened
- Property owners used schemes under which special purpose vehicles took short leases of empty properties and became liable for non-domestic rates.
- Local authorities challenged the schemes and sought unpaid rates.
What the court had to decide
- The Court had to decide how rating legislation applied to the schemes and whether the arrangements achieved the intended avoidance effect.
What the court decided
- The Supreme Court applied a purposive approach and held that the schemes did not achieve their intended result in the way argued by the property owners.
Practical impact
Practical read
- Aggressive tax or rates planning can fail even when the documents look technically clever.
- Businesses should be wary of schemes that rely on form while ignoring the purpose of the legislation.
Useful next steps
- Be cautious with rates avoidance products
- Ask what commercial purpose sits behind each step
- Keep board approval clear where tax or rates planning is material
How businesses should read it
Aggressive tax or rates planning can fail even when the documents look technically clever. Businesses should be wary of schemes that rely on form while ignoring the purpose of the legislation.
Key takeaways
- Be cautious with rates avoidance products
- Ask what commercial purpose sits behind each step
- Keep board approval clear where tax or rates planning is material