The London office, the empty boxes and the £1bn tax loophole
Summary
A London office building leased by a company used a legal loophole involving "box shifting" to avoid paying business rates on empty commercial properties. A recent court of appeal decision ended this tax avoidance scheme, which had cost local authorities over £1 billion.Key Facts
- The building at 2 America Square in London was mostly filled with black boxes, not people.
- The company leasing the building, 48th Street Holdings Ltd, used a scheme to avoid business rates by temporarily placing boxes to claim “occupation.”
- This tax loophole started in 2008 when rules on business rates for empty buildings changed.
- Companies claimed a three-month rate holiday by cycling boxes in and out of the property to reset the vacancy clock.
- The scheme has cost local councils, like the City of London, millions annually—£35 million a year after the pandemic.
- The City of London Corporation challenged the practice in court against 48th Street Holdings and Principled Offsite Logistics Ltd (POLL), a company providing rate avoidance services.
- The court of appeal ruled that this kind of occupation for the sole purpose of saving rates does not count as true occupation.
- This ruling puts an end to the “box shifting” scheme and aims to stop similar tax avoidance in the future.
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