Tooth and claw

RCJ portrait 146x219A business rate liability case of considerable public interest involving the Public Safety Charitable Trust is on its way to the High Court. Virginia Lloyd charts its progress.

The Public Safety Charitable Trust Limited (“PSCT”) is a charity which installs Bluetooth units into empty commercial properties and states that its aim is to increase public safety by transmitting messages to the community and allowing free wi-fi access.

The PSCT has taken out in excess of 1,500 leases throughout the country to date, and its activities are therefore of interest to numerous local authorities.

The modus operandi of the PSCT involves the charity entering into a lease of vacant commercial premises for a year for a peppercorn rent of £1 and assuming liability for the rates. The charity installs the Bluetooth equipment into the premises and then claims both mandatory and discretionary relief from business rates. There is a seven day break clause in the lease which enables a landlord who finds an occupier capable of paying the commercial rent to require the PSCT to leave the premises at very short notice.

The legislation governing empty non-domestic properties and relief from business rates is set out in the Non Domestic Rating (Unoccupied Property) (England) Regulations 2008 and the Local Government Finance Act 1988. Ordinarily, full business rates are due on empty commercial properties that remain unoccupied after three months. However, charities that occupy commercial property qualify for a mandatory 80% discount on business rates provided that the property is used “wholly or mainly” for charitable purposes. Local authorities also have the discretion to grant the remaining 20% as a further discount.

South Cambridgeshire District Council (“SCDC”) initially received applications from the PSCT for charitable relief on four of its leasehold properties and refused to grant the relief. Following a change in the rating list by the Valuation Office Agency, the Council split each of the units (known as “hereditaments”) into two assessments; one for the main unit and one for the wi-fi box. The wi-fi box was allocated a fixed rateable value of £100, with 80% mandatory charitable relief granted on this unit. Discretionary rate relief was refused on policy grounds. For the main unit, the full business rate was calculated on the floor space which remained unchanged and was charged to the PSCT by way of demand notices, reminder notices and summonses.

Liability order applications followed in the Cambridge Magistrates’ Court and were challenged by the PSCT on the basis that the main units were occupied and the charity was therefore entitled to mandatory charitable relief. The matter was set down for trial.

On 29 March 2012, SCDC was the first local authority to go to trial against the PSCT to seek liability orders for non payment of business rates. SCDC were represented by Cain Ormondroyd of Francis Taylor Building and the PSCT were represented by Simon Myerson QC of Byrom Street Chambers.

SCDC accepted that the PSCT was a registered charity and the PSCT accepted the split of the units. SCDC sought to prove that the PSCT was not in rateable occupation of the main unit. In the alternative, it sought to prove that if the PSCT was in occupation, that the main unit was not being used wholly or mainly for charitable purposes. The wi-fi equipment had been separately rated and mandatory charitable relief granted. Evidence was also produced to indicate that the next intended use of the premises was for commercial and not charitable purposes.  

In summing up their decision, the Magistrates referred to the cases of the English Speaking Union v City of Edinburgh Council [2009] CSOH 139 and Arbuckle Smith Co v Greenock Corporation [1960] AC 813 and found that there were other uses the buildings were intended for. They granted liability orders in favour of SCDC on the basis that the four main premises were not being used “wholly or mainly” for charitable purposes and that the premises were classified as business / industrial premises.

The PSCT has since lodged an appeal against this decision by way of Case Stated to the Administrative Court of the High Court. The question before the Administrative Court is whether the Magistrates’ Court erred in law by deciding that the four main premises were not being used wholly or mainly for charitable purposes.

Since the hearing before the Magistrates’ Court, SCDC have obtained a further 53 liability orders against the PSCT. The total sum currently owing by the PSCT in business rate liabilities to SCDC alone is in the region of £250,000. SCDC has obtained an indemnity for the legal costs of the PSCT from the Department for Communities and Local Government in respect of the pending High Court appeal, on the basis that there is a point of law concerned which has not already been determined in previous proceedings.  

SCDC have been in contact with numerous local authorities around the country. It is known that Milton Keynes Council and Chester & West Cheshire Council have also had effective trials against the PSCT. Milton Keynes Council won their case at first instance and it is notable that they did not split the units in their assessment of business rate liabilities. Before West Cheshire Magistrates’ Court however, Chester & West Cheshire Council were unsuccessful against the PSCT.

The PSCT has issued appeals by way of Case Stated against both SCDC and Milton Keynes Council. These appeals have since been linked and set down for an appeal hearing, provisionally over two days from 15 to 16 May 2013. It is anticipated that Chester & West Cheshire Council will also proceed by way of Case Stated to the Administrative Court of the High Court and will seek to have their appeal linked to the existing proceedings.

In the meantime, the PSCT continue to acquire commercial leases around the Country at a rapid pace. Liability orders either remain unpaid pending the High Court appeal or for the most part are being stayed by Magistrates’ Courts around the country pending a High Court decision.

Virginia Lloyd is a Lawyer at South Cambridgeshire District Council. She can be contacted by This email address is being protected from spambots. You need JavaScript enabled to view it..