Stronger powers to tackle Business Rates avoidance

Widespread tax-avoidance schemes are draining public budgets and distorting competition, and business rates fund essential services—including the Fire Brigade, Met Police and TfL—with £2.87bn allocated in 2024–25.

Investigations show landlords exploiting loopholes, from “box-shifting” practices to staging sham snail farms or fake places of worship to claim exemptions for empty properties.

The Assembly today called on the Mayor to urge the Chancellor to grant councils stronger enforcement powers or create an ombudsman-style regulator to deliver fast, fair decisions and curb avoidance while supporting genuine local businesses.

Bassam Mahfouz AM, who proposed the motion, said:

“Business rates avoidance schemes like bogus snail farms to fake places of worship drain millions from vital London services and undermine honest businesses.

“We are calling on the Government to reform business rates and remove these loopholes that allow some businesses to abuse the system. It will mean fairness for hard working businesses, more money for local services and rejuvenate our high streets."

The full text of the motion is:

This Assembly notes that, Business rates contribute to funding vital public services, including those provided by the Greater London Authority. In 2024-25 over £2.87 billion of business rates was allocated to the London Fire Brigade, Met Police, TfL, and other vital services.

Tax avoidance increases the burden of taxation on companies which are operating legally and may provide an unfair competitive advantage.

In 2023 the Assembly passed a motion against ‘box shifting’ schemes that seek to avoid or evade tax. Box shifting misuses regulations intended to support landlords by offering a breathing space window when a tenant leave. The misuse means new ventures and community causes miss out and the exploitation leaves properties empty for longer and huge sums of business rates avoided.

Investigative reporting by BBC London and London Centric has established that empty office buildings have had boxes of snails placed in them in an attempt to claim exemptions from business rates. Agricultural premises are generally exempt from business rates.

Westminster City Council says it has lost £370,000 from schemes run in just two buildings. Four companies have been liquidated but local authorities (which are responsible for collecting business rates) do not have a general power to shut down tax avoidance schemes quickly. Other London councils, especially those where rates values are high, such as Camden’s Holborn Chancery Lane area have also reported significant losses to box-shifters, snail farms and questionable liquidators – all forms of empty rates avoidance tricks.

Akin to manipulating the exemption of farms to business rates, ruthless agents and landlords try to register spaces as places of worship (such as churches) to again avoid empty rates completely. 60 spaces in a single business park outside Dover, Diageo’s ex-HQ in Brent and a boarded up pub in South London are just some of these fake faith spaces increasing the pre-Covid estimate of £250m being lost to rates avoidance.

This Assembly further notes the Government plans to create permanently lower business rates for small business by shifting some of the burden to the 1% of companies using premises rated over £500,000. Shifting taxes from independent small business to online giants like Amazon will provide a boost for London's high streets.

This Assembly therefore calls on the Chair of the Assembly and the Mayor of London to write to the Chancellor in advance of the budget setting out the case for stronger powers for local authorities to deal with tax avoidance or appointing an ombudsman style regulator/Tsar to ensure fast, fair decisions that do not take up significant resources in the already busy justice system and calling on Government to support our high streets by reforming business rates.

The meeting can be viewed via webcast or YouTube.

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