Non-Domestic Rates: Anti-avoidance framework

From 1 April 2026, new regulations will give local authorities stronger powers to tackle non‑domestic rates (NDR) avoidance. The aim is to prevent artificial arrangements designed to reduce or avoid paying business rates, and to ensure that all ratepayers contribute fairly.

This framework sets out the types of arrangements that may be challenged and the actions councils can take where avoidance is identified.

What the framework covers

The anti‑avoidance framework focuses on arrangements that are artificial, non‑commercial, or designed solely to reduce liability. Local authorities may take action where any of the following apply:

Non‑genuine or non‑commercial occupation

An arrangement may be considered artificial if:

  • No rent is paid, or rent is significantly below market value
  • Rent is offset through other payments or benefits
  • The occupier has no real ability to use the property
  • The occupation exists only to reduce rates liability

Where occupation is not genuine, the council may treat the owner as the liable ratepayer.

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Use of companies that are wound up

The framework targets arrangements where:

  • A company is created solely to be the ratepayer
  • The company is later voluntarily wound up
  • This pattern is repeated to avoid ongoing liability

If the owner or connected parties have a history of this behaviour, the council may disregard the arrangement.

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Suspicious or non‑transparent behaviour

Indicators of avoidance include:

  • Refusal to provide details of the true ratepayer
  • Use of individuals with no connection to the business
  • Use of individuals with a history of insolvency, disqualification, or fraudulent trading
  • Attempts to obscure who is responsible for the property

Where transparency is lacking, the council may investigate and reassign liability.

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Minimal or artificial occupation

Some arrangements rely on very limited activity to claim occupation, such as:

  • Placing small devices (e.g., WiFi or Bluetooth transmitters) in a property
  • Occupation that exists only to support a rates‑mitigation business model

These arrangements may be treated as avoidance where the occupation is not genuine.

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Identifying artificial avoidance arrangements

Local authorities may investigate cases where they believe a non‑domestic rates avoidance arrangement has been used. Evidence can come from public sources or through the council’s statutory powers.

Sources of Evidence

Councils may use information from:

  • Companies House
  • Insolvency Service registers
  • Charity Commission registers
  • Court records

Using council powers

Where needed, councils can request information or inspect a property. This may include:

  • lease agreements
  • property surveys
  • agreements with third‑party rates‑mitigation providers

Deciding if an arrangement is artificial

Defined arrangements are treated as artificial by default, but councils may decide otherwise after considering:

  • Whether a genuine business is operating
  • How much of the property is used
  • How long it has been occupied
  • Whether the property suits the business activity

Local knowledge may also be taken into account.

Once an arrangement is identified as avoidance, it will be addressed under the anti‑avoidance framework.

Appealing liability

Local authorities must reverse any benefit gained from an artificial avoidance arrangement. This usually means restoring the non‑domestic rates that would have been payable from 1 April 2026 (or from when the arrangement began, if later).

When the arrangement is disregarded, the person who would normally have been liable for non‑domestic rates, the occupier, or the owner if the property is unoccupied, is treated as responsible for the correct amount.

Liability notices

The local authority will issue a liability notice to the person being treated as liable. The notice will include:

  • The reasons for the decision
  • Information on how to request a review
  • Information on appeal rights

Requesting a review of a liability notice

A person may request a review within 30 days of receiving the liability notice.

The local authority must respond within 30 days of receiving the review request, confirming, amending, or withdrawing the notice.

Appeal against a liability notice

If the notice is confirmed after review:

  • an appeal may be made to the Valuation Tribunal for Wales (VTW) within 30 days.
  • the appeal must include a copy of the notice and the reasons for disputing it.
  • a further appeal may be made to the Upper Tribunal within 28 days of the VTW’s decision.

Collection and enforcement

Once the review and appeal periods have ended, the local authority will issue demand notices for each affected financial year.

A person treated as liable is subject to the standard non‑domestic rates collection and enforcement process, including any additional penalties for non‑payment.

Penalties

A £500 penalty can be issued by the local authority for failing to comply with the duty. Payment is due within 21 days, and if unpaid it may be recovered as a civil debt once any appeal is concluded.

Providing false information knowingly or recklessly can lead to a separate criminal fine of up to £1,000.

Penalty reviews

A person may request a review of a penalty within 30 days of the notice. The authority must respond within 30 days to confirm, reduce, or cancel the penalty; if they do not, it is treated as confirmed. If the amount is reduced or cancelled, a revised notice must be issued and any overpayment refunded within 21 days.

Appealing against a penalty

If a penalty is confirmed or reduced after review, the person may appeal to the Valuation Tribunal for Wales within 30 days, giving reasons.

A further appeal to the Upper Tribunal is possible within 28 days of the VTW’s decision.