The London office, the empty boxes and the £1bn tax loophole
Exclusive: How a court case over an unoccupied office block could end a widely used tax avoidance scheme From the outside, the seven-storey building at 2 America Square looks like any other office block in the heart of London’s financial district. Located about half a mile from Tower Bridge, one might expect it to be a hive of commercial activity, teeming with employees holding important…
The City of London Corporation has secured a significant legal victory, potentially ending a widely used tax avoidance scheme that cost local authorities over £1 billion. The scheme, known as "box shifting," involved leasing vacant office spaces and claiming tax reliefs, only to return the property to vacancy shortly after. This process could reduce business rates owed by up to 67%.
The case centered on the 2 America Square building in London, which was leased by a Virgin Islands-based company called 48th Street Holdings Ltd. The building, leased in 2019, was home to stacks of nondescript black boxes in neat lines, rather than employees. A court case brought by the City of London Corporation against 48th Street Holdings Ltd and a company providing rate mitigation services, Principled Offsite Logistics Ltd, recently resulted in a landmark ruling by three court of appeal judges.
The judges ruled that the scheme "cannot amount to beneficial occupation," signaling the end of this tax avoidance tactic. The ruling has been hailed as a victory for local authorities across England, as it restores fairness, protects revenue for vital public services, and provides greater certainty for councils, ratepayers, and property owners.
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