Business Rates Avoidance Schemes

Debate between Lord Wilson of Sedgefield and Lord Sikka

Wednesday 16th September 2026 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what steps they plan to take to disable business rates avoidance schemes and the industry promoting them.

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

Most businesses pay the rates that are due, but a minority abuse the system to reduce their bills or avoid paying altogether. This imposes an unfair burden on the majority and prevents funding reaching local services. This Government will not tolerate tax avoidance and are committed to taking the necessary action to address avoidance and evasion. Decisions on tax are set at fiscal events and I will not speculate on the upcoming Budget.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for his reply. After claiming empty property relief, some businesses place empty boxes in premises to give the appearance of occupation, subsequently removing them to trigger an additional period of relief. One scheme operated by Principled Offsite Logistics Ltd has deprived councils of £500 million of business rates. Can the Minister ensure that business rates avoidance receives the same priority as tax avoidance and will the Government publish an annual estimate of the revenues lost, require registration of all business rates avoidance schemes and prosecute the enablers?

[Lord Wilson of Sedgefield (Lab)]

My noble friend raises an important point on tax avoidance with business rates. There has been coverage of some of the most egregious instances of business rate avoidance over recent years, including the use of snail farms and prayer rooms. A recent court case, which my noble friend referred to, has made it significantly more difficult for the most common avoidance schemes to be effective. This was a case brought by the City of London; the Court of Appeal ruled in favour of the City of London, and as a result the attempt to secure repeated periods of empty property relief using box shifting failed. The ruling has closed down this particular avoidance scheme, and as a result local authorities can withdraw empty property relief if they are satisfied that a scheme in their area falls within the ruling.