Business Rates Avoidance Schemes

Debate between Lord McCabe and Lord Wilson of Sedgefield

Wednesday 16th September 2026 Lords Chamber

[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.

[Lord McCabe (Lab)]

My Lords, does the Minister agree that more needs to be done to tackle the antics of rogue rating agents who exploit small businesses by submitting false valuations, charging huge fees and often locking them into lengthy and expensive contracts of little or no value?

[Lord Wilson of Sedgefield (Lab)]

I thank my noble friend for his question. While they do not apply to business rates, additional criminal sanctions were introduced in the Finance Act 2026 that will enhance the deterrent against the promotion of tax avoidance and increase protection against harm caused to the Exchequer, the taxpayer and the tax system. The new measures, when combined with HMRC’s existing powers, mean that promoters of marketed tax avoidance will face large fines or criminal sanctions if they do not disclose their avoidance scheme, promote types of schemes that HMRC has set out as prohibited, do not comply with our information notices or do not stop promoting their schemes when issued with a legal notice requiring them to do so. There is a lot going on, but I accept the point that my noble friend makes.