Wigan Council v Property Alliance Group Limited

1. This was the trial of two ‘lead’ claims for the recovery of national non-domestic rates (“NDR”) and declarations that certain schemes designed to avoid or mitigate the incidence of NDR are ineffective for the purpose. The claimants are billing authorities with responsibility for the recovery of NDR within their statutory areas. The defendant in both of these claims is a property investment and development company. Summary procedural history

2. These are two of a large number of claims for such relief issued in the High Court. They have a lengthy procedural history including, importantly, a decision of the Supreme Court in Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021] UKSC 16 ; [2022] AC 690 . On 5 May 2023, at a hearing attended by Counsel for the claimants, and by leading Counsel for the defendants, in 37 such cases I directed that all those claims should proceed in the Business and Property Courts of the High Court in Liverpool, Business List (ChD), and that all of them should be stayed pending final determination of three lead claims, which should be tried together. The three lead claims were Wigan Council v Property Alliance Group Limited D30LV344 (now PT-2024-LIV-000040), Trafford Council v Property Alliance Group Limited (now PT-2024-LIV-000041) and Bradford v Inverworth Ltd D30LV348 (now PT-2024-LIV-000042). The latter claim settled shortly before trial. Outline of Schemes 1, 2 and 3

3. The NDR avoidance schemes involved are varieties of what may be called a liquidation scheme. The scheme provider incorporates or procures the incorporation of a special purpose vehicle (“SPV”) to which the owner of an unoccupied business property grants a scheme lease of that property. The purpose of doing so is to make the SPV the person entitled to possession of the property and so, for the purposes of NDR, the owner of the property, and thus liable for NDR in respect of it. The SPV does not, of course, occupy the property under the scheme lease. On or shortly after the grant of the scheme lease, the SPV is placed into members voluntary liquidation (“MVL”). For as long as the SPV remains in liquidation, it can seek to rely on the exemption from NDR in respect of property whose owner is a company which is being wound up voluntarily under the Insolvency Act 1986 .

4. If operative, the effect of the schemes is that no one is liable to pay NDR in respect of the unoccupied property for as long as the SPV is in liquidation and the scheme lease continues. If an occupier for the property is found, the scheme lease is terminated.

5. Property Alliance Group Ltd (“PAG”) and others have developed varieties of this scheme. In its first iteration (‘Scheme 1’), the SPV goes into liquidation, but no liquidator is ever appointed. Wigan Council v Property Alliance Group Limited is an example of Scheme 1. In May 2011, the Secretary of State presented petitions against the Scheme 1 SPVs to wind them up on public interest grounds. PAG, the operator of Scheme 1, did not oppose the petitions, and on 27 July 2011 the SPVs were ordered to be wound up.

6. The second iteration (‘Scheme 2’) does involve appointing liquidators upon entry into MVL. The liquidators do not, or do not immediately, disclaim the scheme leases. Trafford Council v Property Alliance Group Limited is an example of Scheme 2. In December 2013, the Secretary of State presented a petition against the operator of Scheme 2, PAG Management Services Ltd (“PAGMSL”), a subsidiary of PAG. PAGMSL opposed the petition, but was wound up following the judgment of Norris J in re PAG Management Services Ltd [2015] EWHC 2404 (Ch) .

7. The third iteration (‘Scheme 3’) provides for the SPV to be entitled to a determination premium under the scheme lease, which increased in value the longer the lease was not disclaimed, with a view to giving the liquidator a basis for not disclaiming. Winding up petitions in relation to Scheme 3 companies were issued in 2018 but did not succeed in the High Court ( re PAG Asset Preservation Ltd [2019] EWHC 2890 (Ch) ; [2020] BCC 167 , a decision of HHJ Stephen Davies, whose decision was upheld by the Court of Appeal [2020] EWCA Civ 1017 ; [2020] BCC 979 ). Bradford v Inverworth Ltd was an example of Scheme 3, but the parties reached agreement in that case shortly before this trial, and accordingly it does not fall to be decided in this judgment. The Wigan claim

8. The Wigan claim relates to three hereditaments entered in the relevant rating list as Unit 5, Unit 5B and Unit 5C, all located on the South Lancs Industrial Estate, Lockett Road, Ashton-in-Makerfield, Wigan, Lancashire. The claim in respect of Unit 5 is for £113,035.51 for the period from 25 May 2012 to 16 March 2014. That in respect of Unit 5B is for £64,805.37 for the period from 22 May 2008 to 14 January 2010. That for Unit 5C is for £1,773.50 for the period from 15 January 2010 to 31 August 2010. The Trafford claim

9. The Trafford claim relates to the following five hereditaments (the “Trafford Hereditaments”) entered in the relevant rating list: (i) Clarke Industrial Estate, St Modwen Road, Trafford Park, Manchester, M32 0ZE (“Clarke Industrial Estate”); (ii) Ground Floor, Corner House, Cross Street, Sale, M33 7JN (“Ground Floor Corner House”); (iii) Unit 2, Atlantic Point, Atlantic Street, Altrincham, Cheshire, WA15 5DH (“Unit 2 Atlantic Point”); and (iv) Pt 1st Floor (“Pt 1st Floor”) and Suite B (“Suite B”), Westgate House, 44 Hale Road, Hale, WA15 9RH. The claimed liability periods (the “Trafford Liability Periods”) and corresponding claimed amounts are: (1) Clarke Industrial Estate: 27 January 2012 – 24 August 2014 (£329,642.20). (2) Ground Floor Corner House: 27 January 2012 – 11 September 2014 (£48,898.76). (3) Unit 2 Atlantic Point: 19 June 2013 – 27 August 2013 (£2,122.72). (4) Pt 1st Floor: 8 June 2012 – 1 June 2015 (£32,763.61). (5) Suite B: 8 June 2012 – 31 December 2012 (£5,974.08).

10. PAG is sued on the basis that the schemes are ineffective to make the SPVs liable as owners of the properties concerned, and that accordingly PAG is the owner and liable for NDR.

11. PAG denies liability principally on the ground that Scheme 1 as applied to the Wigan claim and Scheme 2 as applied to the Trafford claim rendered the SPVs liable as owners (and not PAG) but then exempt, as companies in liquidation (“the liability issue”). It also claims that Wigan and Trafford failed to serve valid demand notices so that no duty to pay NDR ever arose, even if there were a liability (“the demand notice issue”). There are also specific points relating to particular hereditaments. The legislative framework Persons subject to NDR

12. Section 41 of the Local Government Finance Act 1988 requires the Valuation Officer (an HMRC official) to compile and maintain lists for billing authorities (to be called their ‘local non-domestic rating lists’).

13. Section 42 of the 1988 Act requires such lists to show each relevant non-domestic hereditament in the authority’s area, at least some of which is neither domestic property nor exempt from local non-domestic rating, and which is not required to be shown in a central non-domestic rating list.

14. Section 43 of the Act governs liability for NDR in respect of occupied hereditaments. It provides “(1) A person (the ratepayer) shall as regards a hereditament be subject to a non-domestic rate in respect of a chargeable financial year if the following conditions are fulfilled in respect of any day in the year— (a) on the day the ratepayer is in occupation of all or part of the hereditament, and (b) the hereditament is shown for the day in a local non-domestic rating list in force for the year.” As to occupation, Section 65(2) of the 1988 Act provides that “Whether a hereditament or land is occupied, and who is the occupier, shall be determined by reference to the rules which would have applied for the purposes of the 1967 Act [the General Rate Act 1967 ] had this Act not been passed (ignoring any express statutory rules such as those in sections 24 and 46A of that Act ).” The classic statement of the ingredients of rateable occupation under those rules is that of Tucker LJ in John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 , at 350: “… there are four necessary ingredients in rateable occupation … First, there must be actual occupation; secondly, that it must be exclusive for the particular purposes of the possessor; thirdly, that the possession must be of some value or benefit to the possessor; and, fourthly, the possession must not be for too transient a period.”

15. NDR is also payable in respect of unoccupied hereditaments. Section 45 of the 1988 Act provides “(1) A person (the ratepayer) shall as regards a hereditament be subject to a non-domestic rate in respect of a chargeable financial year if the following conditions are fulfilled in respect of any day in the year - (a) on the day none of the hereditament is occupied, (b) on the day the ratepayer is the owner of the whole of the hereditament, (c) the hereditament is shown for the day in a local non-domestic rating list in force for the year, and (d) on the day the hereditament falls within a class prescribed by the Secretary of State by regulations.”

16. By Section 65(1) of the 1988 Act , the owner of a hereditament or land is “the person entitled to possession of it”. This provision was considered by the Court of Appeal in Brown v City of London Corporation [1996] 1 WLR 1070 and by the Supreme Court in Rossendale . In Rossendale the court was dealing with, among other things, the application of PAG to strike out the present Wigan claim.

17. The Secretary of State has prescribed a class for the purposes of s. 45(1) (d) of the 1988 Act by the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008/386, reg.3 of which provides “The class of non-domestic hereditaments prescribed for the purposes of section 45(1) (d) of the Act consists of all relevant non-domestic hereditaments other than those described in regulation 4.”

18. So far as material, reg.4 (k) of the 2008 Regulations provides “The relevant non-domestic hereditaments described in this regulation are any hereditament … whose owner is a company which is subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntarily under that Act …” This is the exemption from NDR in respect of property whose owner is a company which is being wound up voluntarily under the Insolvency Act 1986 to which reference was made above. Liability to pay NDR

19. The provisions mentioned so far identify the persons subject to NDR. The duty to pay NDR arises after service of a valid “demand notice” under the Non-Domestic Rating (Collecting and Enforcement) (Local Lists) Regulations 1989/1058 (the “1989 Regulations”), which were made under Sch.9 to the 1988 Act . Reg. 4 requires billing authorities to serve demand notices on ratepayers. Ratepayers are defined as “the person liable to pay an amount under section 43 or 45 of the [1988] Act to the authority in respect of the year”: reg. 3(1) of the 1989 Regulations.

20. At all material times and so far as material reg. 5 has provided “(1) … a demand notice shall be served on or as soon as practicable after - (a) except in a case falling within sub-paragraph (b), 1st April in the relevant year, or (b) if the conditions mentioned in section 43(1) or 45(1) of the Act are not fulfilled in respect of that day as regards the ratepayer and the hereditament concerned, the first day after that day in respect of which such conditions are fulfilled as regards them.”

21. Reg. 7(6) of the 1989 Regulations provides that “No payment in respect of the amount payable by a ratepayer in relation to a hereditament for any chargeable financial year (whether interim, final or sole) need be made unless a notice served under this Part requires it.”

22. The consequence of a failure to serve a demand notice as soon as practical after the relevant date was considered in North Somerset District Council v Honda Motor Limited [2010] EWHC 1505. This is the basis of the defendant’s case on the demand issue. Historical background

23. The historical background to the charging of NDR is set out in paragraphs 20 – 27 of the judgment of the Supreme Court in Rossendale . “Rates were for centuries a charge on occupation rather than the ownership of land, but their rationale changed over time from poor relief to payment for the provision of local services... The charge affected all those in actual occupation, with or without title to occupy …The question whether property is occupied and, if so, who is the occupier for rating purposes is still largely governed by the common law rules: see section 65(2) of the 1988Act. The classic statement of those rules is that of Tucker LJ in John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 , 350, recently reaffirmed by this court in Cardtronics UK Ltd v Sykes (Valuation Officers) [2020] 1WLR 2184, para 13…Provision for levying rates on unoccupied property was first made by sections 20 to 22 of the Local Government Act 1966 , and then in similar terms in the General Rate Act 1967 …This reform was said to be necessary because the notion “that properties should remain empty and available for occupation for long periods in conditions of scarcity is an affront to all right-thinking people”. Making rates payable on empty property should also “reduce the present waste of accommodation” …In Hastings Borough Council v Tarmac Properties Ltd (1985) 83 LGR 629, 633Lawton LJ said that the mischief with which the relevant statutory provisions were intended to deal “can be clearly identified. Parliament wanted to stop the owners of premises … leaving them unoccupied to suit their own convenience and to their own financial advantage” … During the passage through Parliament of the Bill which became the 1988 Act the Government made it clear that it was not seeking to modify the justification underpinning the rates regime. When the Bill was considered in committee in the House of Lords, the Earl of Caithness (then Minister of State for the Environment whose department was responsible for the Bill) acknowledged that “historically, the purpose of empty property rating has been partly to reflect the fact that empty properties do benefit from some local authority services - police, fire and so forth - and partly to encourage owners to bring empty property back into use” (Hansard (HL Debates), 9 June 1988, cols 1552—1553)…The thrust of the exceptions is to exclude properties where, for varying reasons, the owner either (i) may be unable to bring the property back into occupation, or (ii) may be regarded as having a reasonable excuse for not doing so, or (iii) may be making some other valuable contribution to society by being the owner, in lieu of paying rates… Thus, within the first of these categories, regulation 4(c) provides an exemption where occupying the property is unlawful. In the second category regulation 4(d) does so where property is kept vacant ahead of planned compulsory acquisition, and regulation 4(e) does so where the property is subject to a building preservation notice or listed as such. Regulation 4(h) to (m) exclude properties whose owner is an office holder, whether a personal representative, trustee in bankruptcy, liquidator or administrator, in each case subject to duties (e g to realise by sale) which will or may conflict with securing early occupation…” Moral judgment

24. The defendant submits that, as a matter of general principle, it would be wrong, as a matter of law, to apply any kind of moral judgment to the schemes for the avoidance of NDR presently under consideration, relying on several authorities including O’Neil v Inland Revenue Commissioner [2001] 1 WLR 1212 , at [9], per Lord Hoffmann, who doubted the wisdom of using the concept of ‘impropriety’ in that case, which “suggests a moral judgment which their Lordships think is inappropriate and has been consistently repudiated in cases on tax avoidance schemes in England and New Zealand.” As the defendant submitted, after all, liability to tax (including NDR) depends on statutory construction and not moral disapproval: McGuckian v Inland Revenue Commissioners [1997] 1 WLR 991 , 997, per Lord Browne Wilkinson.

25. I accept this, and that it applies in the context of rates avoidance. The Supreme Court in Rossendale has in any case explained how the statutory provisions applicable in the present case fall to be construed, as we shall see below. The decision in Rossendale

26. As the head note to the report of Rossendale in the Appeal Cases report states “(1) … in order to ascertain whether a particular statutory provision imposed a charge, or granted an exemption from a charge, the court should (i) ascertain the class of facts intended to be affected by the charge or exemption, which was a process of interpretation of the statutory provision in the light of its purpose, and (ii) to discover whether the relevant facts, looked at in the round, fell within that class, which was a process of applying the statutory provision to the facts; that, having regard to the historical background and the statutory scheme as a whole, the main purpose of section 45 of the Local Government Act 1988 was to encourage owners to bring unoccupied property back into use for the benefit of the community; that, further, section 65(1) served that purpose by imposing liability for non-domestic rates on the person who had the ability, in the real world, to bring an unoccupied property back into use, namely the person entitled to possession of the property; that although in a normal case “the person entitled to possession” in section 65(1) was to be interpreted as the person who, as a matter of the law of real property, had the immediate legal right to actual possession of the property, Parliament could not have intended that those words should encompass a company which had no real or practical ability to exercise its legal right to possession and on which that legal right had been conferred for no purpose other than the avoidance of liability for rates; that, accordingly, on a purposive interpretation, the words “the person entitled to possession” in section 65(1) connoted a person who had a real and practical entitlement which carried with it in particular the ability either to occupy the property in question, or to confer a right to its occupation on someone else, and thereby to decide whether or not to bring it back into occupation; that, in the present cases, none of the SPVs answered to that description since they had no real or practical control over whether the relevant properties were occupied or not; that, rather, such control had remained at all times with the defendants, who therefore each had been “the person entitled to possession” within the meaning of section 65(1) ; that it followed that the defendants had been the “owners” of the hereditaments for the purposes of section 45(1) (b) of the 1988 Act and there was a triable issue as to whether they had remained liable for non-domestic rates throughout the duration of the leases; and that, accordingly, the order striking out the claims would be set aside.”

27. This was, of course, concerned with an application to strike out, and there had been no findings of fact. The court assumed disputed facts in favour of the claimants. It did, however, set out the way in which the relevant statutory provisions fell to be construed, using a purposive construction. At [30], the Court observed, “In relation to the central purpose of providing an incentive to bring unoccupied property back into use, the intention is clear. It focuses the burden of the rate precisely on the person who has the ability, in the real world, to achieve that objective.”

28. The court drew the elements of the schemes together, and set out what might be said on the agreed or assumed facts of the cases before it ([46]). “(i) The leases were not shams and created genuine legal rights and obligations. (ii) The leases were entered into, and the rights under them granted, solely for the purpose of avoiding liability for business rates on the part of the defendant and for no other purpose. (iii) The leases were not granted with the intention of allowing the SPV to make any use of the property, or giving the SPV any role in its being brought back into use. To the contrary, it was an inherent part of the schemes that the SPV would have no ability to do so. The SPVs were constituted in such a way that they could do nothing with their rights under the lease, having neither the monetary nor human resources with which to do so, nor any business of which such an activity could form a part. Those rights were accordingly of no value or benefit to the SPV. Furthermore, the SPVs were intended either to go into immediate liquidation (under Scheme B) or to be dissolved after a period of inactivity which was to begin upon the grant of the lease (under Scheme A). (iv) By the same token, the schemes were designed so that the practical ability to decide whether to continue to leave the property unoccupied remained with the defendant landlord. If at any time the defendant found a tenant or acquired a use for the property, it could simply terminate the lease. In Lord Denning MR’s phrase (see para 29 above), it was the defendant who really had control of letting the property. (v) Although the leases were granted with the object of imposing the legal liability for business rates initially at least upon the SPV in exoneration of the defendant, it was not intended that any business rates would actually be paid by the SPV. Nor was there any possibility that the SPV would in fact pay those rates, once demanded. It had no assets from which to do so. Under Scheme A the plan was that the liability for business rates would just accumulate, unpaid, until the SPV was dissolved, following which the further accruing liability would be incurred by the Crown, until the Crown disclaimed the lease and the liability was extinguished. Under Scheme B the plan was for the SPV to be placed immediately in liquidation to claim the shelter of the regulation 4(k) exemption and stay there for as long as could be engineered. Both schemes were managed so as to prolong the period before the disclaimer of the leases, and therefore the hiatus in payment of rates, for as long as possible. (vi) Each scheme pursuant to which the leases were granted involved as an integral part the misuse of a legal process: namely, the dissolution of a company and the law governing dissolution in the case of Scheme A and the liquidation process and the insolvency legislation in the case of Scheme B. Furthermore, Scheme A (if effective) involved an inevitable breach of statutory and fiduciary duty by the directors of the SPVs in the very acceptance of the leases, and the section 1003 variant is likely to have involved the commission by those directors of criminal offences.”

29. At [47-48] the Court stated, “47 There can be no doubt that the definition of the “owner” of a hereditament in section 65(1) of the 1988 Act as “the person entitled to possession of it” is to be interpreted as denoting in a normal case the person who as a matter of the law of real property has the immediate legal right to actual physical possession of the relevant property. Arden J so held in Brown v City of London Corpn [1996] 1 WLR 1070 as a reason for concluding that the right of a receiver under a debenture to exercise a power to displace the possession of the company which was the tenant of an unoccupied property did not make the receiver the “owner” of the property for the purposes of section 65(1) and thereby liable for business rates. It has not been suggested that that conclusion was wrong. Furthermore, such an interpretation generally accords with the legislative purpose of imposing the liability for business rates on the person who controls whether the property is left unoccupied and on whom the legislation is intended to place an incentive to bring the property back into use for the benefit of the community. 48 In the unusual circumstances of this case, however, identifying “the person entitled to possession” in section 65(1) of the 1988 Act as the person with the immediate legal right to possession of the property would defeat the purpose of the legislation. As we have explained, the schemes were designed in such a way as to ensure that the SPV to whom a lease was granted had no real or practical control over whether the property was occupied or not and that such control remained at all times with the landlord.” Two tests?

30. The defendant argued that the proposition in [47] regarding a normal case was derived from the judgment of Arden LJ in Brown v City of London Corporation [1996] 1 WLR 1070 , in which at pp1082-1083 she had held as follows. “As there cannot in general at least be two persons in different capacities in possession at the same time … it must follow … that a person is entitled to possession for the purposes of section 65(1) of the Act of 1988 only if he is immediately entitled to possession. It is not enough that a person has a right which if exercised would result in his having possession. Accordingly the fact that the receivers could have displaced the possession of the company, or exercised their power under … the debentures is not enough to make them ‘owners’ for the purposes of section 65(1) of the Act of 1988.”

31. On that basis, it was suggested on behalf of the defendant that there was a ‘ Brown test’, which was applicable in ‘normal’ cases, and an extended ‘ Rossendale test’, which applied in unusual cases. This then founded a submission that there was nothing unusual about the Wigan scheme or the Trafford scheme so to justify the application of the Rossendale test.

32. I do not accept that there are two separate tests to identify the person entitled to possession for the purposes of section 65 (1) of the 1988 Act , one for normal cases and one for unusual cases. It would be a very odd way of approaching statutory construction, rather as if one were to say that the section meant one thing on Mondays, Tuesdays and Wednesdays, and a different thing for the rest of the week. In my judgment, there is only one test, and that is the Rossendale test. The case of Brown , in the excerpt quoted, did not purport to establish all the necessary and sufficient conditions for the satisfaction of any test for identifying the person in possession, but only a necessary condition: that they should be immediately entitled to possession. There is nothing inconsistent with the Rossendale test in that. The distinction drawn in Rossendale between normal cases and unusual was not to suggest that the test differed according to circumstance, but that what the phrase “the person entitled to possession” denoted in different circumstances: in other words, what person the application of the test identified. In the Brown case, that was simply the person immediately entitled to possession, because the circumstances were not unusual. In the Rossendale case, on the facts as agreed and assumed, it identified PAG.

33. The only point, therefore, in attempting to persuade the court that there is nothing unusual about the present cases is, not to secure the application of a more favourable test, but simply to say, when applying the Rossendale test in the present case, that there is no point in asking whether the candidate has real or practical control, because it is a normal case. But that is to beg the question. Moreover, it sits very uncomfortably with the view of the Supreme Court that, if the schemes were designed so as to ensure that the SPV to whom a lease was granted had no real or practical control over whether the property was occupied or not, and such control remained at all times with the landlord, that would be precisely the unusual situation which their Lordships had in mind. Rossendale continued

34. At [49], the Court went on to state, “In our view, Parliament cannot sensibly be taken to have intended that “the person entitled to possession” of an unoccupied property on whom the liability for rates is imposed should encompass a company which has no real or practical ability to exercise its legal right to possession and on which that legal right has been conferred for no purpose other than the avoidance of liability for rates. Still less can Parliament rationally be taken to have intended that an entitlement created with the aim of acting unlawfully and abusing procedures provided by company and insolvency law should fall within the statutory description.” It is apparent from that passage that the key issue is whether the SPVs had a real or practical ability to exercise their legal right to possession, rather than a legal right to possession granted merely for the avoidance of NDR. As it is expressed, it appears that acting unlawfully and abusing legal procedures are not necessary to failing the test, but, if present, are aggravating features, and emphatic markers of such failure. I do not accept, therefore, the defendant’s submission that unlawfulness and abuse were critical factors in the decision of the Supreme Court in the sense that their presence is necessary for the test to be failed. No such distinction arose, in any event, in the decision of the Supreme Court, because those factors were intrinsic to the schemes under consideration on the agreed and assumed facts.

35. The court continued ([50-51], “50 In these circumstances we have no difficulty in concluding that, on the agreed and assumed facts, the SPVs to which leases were granted as part of either of the schemes we have described did not thereby become “entitled to possession” of the demised property for the purposes of the 1988 Act . Rather, throughout the term of the lease that person remained the defendant landlord. This does not involve ignoring the leases, in the way that an intermediate element in a circular transaction might be ignored under the Ramsay doctrine. Rather it involves their close examination in their context, and a conclusion that they did not transfer to the SPVs the entitlement to possession required by the Act as the badge of ownership. If the defendants did not thereby transfer their entitlement to possession it necessarily remained, for the purposes of the Act , with them. The Act requires someone to be identified as the owner. That will be the person who, in any tenurial chain, starting with the freeholder and working downwards, has not disposed of the entitlement to possession of the property in question. 51 We emphasise that this conclusion is not founded on the fact that the defendant’s only motive in granting the lease was to avoid paying business rates, although that was undoubtedly so. If the leases entered into by the defendants had the effect that they were not liable for business rates, their motive for granting the leases is irrelevant. Nor does it illuminate the legal issues to use words such as “artificial” or “contrived” to describe the leases, when it is now accepted that they created genuine legal rights and obligations and were not shams. Our conclusion is based squarely and solely on a purposive interpretation of the relevant statutory provisions and an analysis of the facts in the light of the provisions so construed.” I therefore accept the defendant’s submission that it is legally irrelevant whether PAG was motivated by a desire to avoid NDR.

36. At [59] the Court stated, “In a similar way in the present case we consider that the words “entitled to possession” in section 65(1) of the 1988 Act as the badge of ownership triggering liability for business rates are properly construed as being concerned with a real and practical entitlement which carries with it in particular the ability either to occupy the property in question, or to confer a right to its occupation on someone else, and thereby to decide whether or not to bring it back into occupation. The fact that the property is by definition unoccupied means, as Henderson LJ said, that there is no scope for identifying as the owner anyone in actual occupation. But it does not preclude asking the question whether a lease granted as part of a scheme for tax avoidance having the characteristics set out in para 46 above confers an entitlement to possession in the relevant real and practical sense, so as to identify the lessee as the owner for the purposes of the liability for business rates. If it does not do so, in particular because, under the scheme, there is no question of the SPV being able to exercise any of the attributes of a person with an entitlement to possession, and in particular to bring the premises back into occupation by itself or by anyone else, then the lessee under that lease will not be the owner. The landlord, as grantor of the lease, will be the owner, because the landlord will not by the grant of the lease have transferred to the lessee a real entitlement to possession.”

37. Finally, for present purposes, the Court said [61-62], “61 It may be that other factual situations may demonstrate that this test needs some further adjustment. For example the letting of unoccupied business property by a parent company to a wholly owned and controlled subsidiary would not of itself cause the subsidiary to fail to satisfy the ownership test merely because the management of the affairs of the subsidiary (including whether to bring the premises back into occupation) rested with the parent’s board. We would, however, reject the criticism that the test is insufficiently certain. In any ordinary case the test will easily be satisfied by identifying the person who is entitled to possession as matter of the law of real property. The fact that the law of real property may not prove a reliable guide in an unusual case of the present kind is not in our view an objection to our preferred interpretation. The value of legal certainty does not extend to construing legislation in a way which will guarantee the effectiveness of transactions undertaken solely to avoid the liability which the legislation seeks to impose. Conclusion on statutory interpretation 62 On what we conceive to be the proper interpretation of the definition of “owner” in section 65(1) of the 1988Act, none of the SPVs granted rights by the leases under review in these proceedings answers to that description on the agreed and assumed facts. Rather, on those facts “the person entitled to possession” of the property remained at all material times the defendant landlord. Accordingly, there is a triable issue whether the defendants remained liable for business rates throughout the duration of the leases as claimed by the local authorities and those claims should not be struck out.” Real and practical

38. One might have thought that the judgment in Rossendale was so clear and comprehensive as to preclude any significant argument about the effectiveness of the schemes on the facts of these cases. However, Rossendale was decided on both agreed and assumed facts. The actual facts were explored in some detail on the material before me.

39. It was admitted that the motivation of PAG in granting the leases to the SPVs was solely for the purpose of avoiding liability for NDR. However, as already indicated, that is irrelevant.

40. There was, of course, nothing about the leases themselves which meant that they were not capable of conferring an immediate right to possession and, in another context, a real and practical right to possession. They were not shams, either, in the sense of not being genuine transactions, or being a different kind of transaction from a lease.

41. But it was admitted, also, that the SPVs were intended to go into liquidation immediately after the grant of the leases, or within a short period thereafter. That is relevant to the question whether the leases conferred a real and practical right to possession, because both the leases and liquidation were part of the same scheme.

42. Moreover, it was admitted that the only business activity undertaken by the SPVs was entering into the leases. The schemes involved the SPVs’ not occupying or carrying out any business activities on or from the relevant premises.

43. Nor could they have done so: they had no money or other resources with which to do so. It was said on behalf of the defendant that if the SPVs had required resources, such resources were available from PAG. It was clear from the evidence, however, that it would have been entirely a matter for PAG to decide whether to provide resources. Nor was there evidence to suggest that the SPVs ever did require or might have required resources; or that any provision had been made for the supply of such resources; or that they were entitled to require the provision of such resources; or that it was any part of the schemes that they should obtain or deploy any resources for any purpose whatever.

44. I am entitled to and do infer from the defendant’s decision not to call any directors of PAG to give evidence as to the availability of resources, that such evidence would not have assisted PAG. I conclude that it was never contemplated until after the event that PAG’s resources might ever have been in play.

45. It is perfectly true that the scheme leases afforded the SPVs the legal right to occupy the premises, or to put someone else into occupation, by way of assignment, or under letting, for example. It was essential to the schemes, however, that they should not exercise those rights, and in fact they never did so. The scheme leases provided no real benefit to the SPVs, and had no value for them. Their only value was to the landlord, to the extent that they protected it from having to pay NDR.

46. In answer to the claimants’ case that the SPVs were simply the creatures of the defendant, acting (to the extent they acted at all) at the direction of the defendant, the defendant pointed to the fact that each of the tenants had an active director who was paid a fee for carrying out the functions of that office and through whom the SPV could act. However, the defendants did not call an SPV director to give evidence, although it might readily have done so had it chosen. I am entitled to and do infer that had such evidence been given, its effect would have been to support the claimants’ case rather than the defendant’s. I conclude that the director’s role was simply to be on board with the applicable scheme.

47. Some time was spent in the evidence in considering the role of the liquidator. It is clear from the evidence of Mr Mather, a former consultant to PAG, that the liquidator, although he may have been appointed in form by the SPV, was selected by PAG, and was so selected on the basis of willingness to act in conformity with the scheme, on an indemnity from PAG.

48. I accept that the liquidator was involved in marketing the premises but the documentation indicates that control of this process lay with PAG, which paid for the process, and made the decisions. Mr Mather was only willing to concede that PAG had an element of control, but it went further than that. In any event, it occurred after the liquidation. On completion of successful marketing the scheme lease was terminated (rather than being assigned or sublet), and the tenant occupied under a new lease.

49. Accordingly, I conclude that the SPVs had no real or practical ability to exercise their legal rights to possession, because of the operation of the schemes to avoid liability for NDR. Misuse of legal process

50. Because the defendant argued that, in order to succeed on this point, the claimants must show an element of acting unlawfully and abusing procedures provided by company and insolvency law, I consider those matters separately in this section of my judgment.

51. In Rossendale at paragraph 44 the Supreme Court stated: “…a voluntary liquidation conducted in accordance with the applicable rules, and for the purpose of the orderly winding up of the affairs of the SPV, would not achieve the scheme’s objective of obtaining a substantial financial benefit for the landlord of the property and the promoter of the scheme. Liquidators would be appointed. They would quickly realise that the leases were onerous and disclaim them. The landlord of the property would then become entitled to possession again. To delay this, the scheme was arranged so as to secure that the liquidations would continue rather than proceed to a conclusion.”

52. I accept and adopt the observations of Norris J in re PAG Management Services Ltd [2015] EWHC 2404 (Ch) where he said “In my judgment the purpose of liquidation is the collection, realisation (though not invariably) and distribution of assets in satisfaction of the claims of creditors and the entitlements of members…I hold that there is a clear public interest in ensuring that the purpose of liquidations is not subverted, as I consider it is by treating a company in liquidation as a shelter (and seeking to prolong its continuation as such.” It was argued that this was wrong and per incuriam , because there is nothing in the Insolvency Act 1986 which provides that the members of the company must have any particular purpose in mind when deciding to put that company into MVL; and that Act is not concerned with questions of tax or tax avoidance; while section 91(1) of the 1986 Act refers to the liquidators being appointed for the purpose of winding up the company’s affairs and distributing its assets, this originated from s 133(2) of the Companies Act 1862 Act which did no more than define the consequences ensuing upon a voluntary winding up - so that it has nothing to do with the purposes of a liquidation, only with the functions of the liquidator.

53. I do not accept this submission. It entails ignoring the reasons why the legislation is in place at all. Moreover, the express provision about the functions of a liquidator illuminates the purpose of a liquidation.

54. Section 91 Insolvency Act 1986 requires a company in members voluntary winding up to appoint one or more liquidators for the purpose of winding up the company’s affairs and distributing its assets. The requirement is unqualified. In my judgment, to put a company into members voluntary winding up on the basis that no liquidator will be appointed, which is the basis of scheme 1, the Wigan scheme, represents a misuse of the insolvency process and legislation.

55. In relation to scheme 2, the Trafford scheme, Mr Mather accepted that the liquidator was selected by PAG, and selected on the basis of willingness to conform with the scheme, the essence of which was that the scheme lease should not be disclaimed. Accordingly, in my judgment there was an abuse of the insolvency legislation.

56. It is no answer, in my judgment, to say that NDR was avoided, not because of the insolvency legislation, but because of the winding up exemption, which was a feature of the rating legislation. The misuse was of the insolvency legislation, to gain the benefit of the winding up exemption for purposes for which it was not provided. It was an abuse of both. Nor it is anything to the point to say that there is nothing inherently wrong or unusual about the incorporation of an SPV to act as an asset shelter for the purpose of some artificial transaction device designed to avoid tax. The incorporation of the SPV is not, on its own, the objectionable feature. I do not need to decide whether the liquidators acted improperly: the question is the propriety of the scheme in the context of the legislation and its purposes.

57. The defendant submitted that since each element of the scheme was (it was said) not a misuse of legal process, or otherwise unlawful, it was impossible to see how the schemes might be criticised when each of those lawful elements was added together. I do not accept this either. It is the combination of the parts which is objectionable.

58. It was argued on behalf of the defendant that an important distinction was to be drawn between MVLs and any other kind of winding up, because MVLs were always to be treated as a private affair of the company’s members, with limited if any consideration given to the interests of creditors or other third party stakeholders. That being so, it was hard to say that the schemes represented a misuse of the insolvency process. The avoidance of NDR was a byproduct, and should be regarded as a completely separate matter. However, this argument cannot stand with Rossendale, and I need say no more about it.

59. Leading Counsel for the defendant also submitted that if the SPVs, with the immediate legal right to possession under the scheme leases, were not liable for NDR, there is a question as to who is liable. Rossendale at [50] suggests you go up the “tenurial chain, starting with the freeholder and working downwards.” But if PAG is to be regarded as having a real and practical ability to possess the relevant hereditament, but does not have the legal right to do so because of the scheme leases, it is hard to see how the Rossendale test could be satisfied at all, and the case must have been wrongly decided.

60. He accepted, nonetheless, that this court is bound by Rossendale , and did not invite me to engage with this supposed paradox. I note, however, that Rossendale stated that “ The Act requires someone to be identified as the owner. That will be the person who, in any tenurial chain, starting with the freeholder and working downwards, has not disposed of the entitlement to possession of the property in question.”

61. Accordingly, I conclude that neither scheme was effective to avoid NDR and that PAG is in principle the person liable for NDR. Specific matters Unit 5, Unit 5B and Unit 5C

62. I accept that, as explained by Mr Mather in evidence, these units are also known as respectively Unit A1, Unit A3 and Unit A4.

63. The claim for NDR in respect of Unit 5 is for the period 25 May 2012 – 16 March 2014. The defendant’s case is that on 31 May 2012 PAG granted a licence to occupy unit 5 to Fresh Direct (UK) Ltd (‘Fresh’) for storage. The licence agreement was in evidence, and there is nothing in the document itself to suggest that it was not genuine. Nor were the claimant’s witnesses able to identify any reason to suppose it was not. The Companies House documents suggest Fresh is a real and active trading company. I consider that there is adequate evidence for me to conclude that Fresh took up occupation under that licence, until it was terminated on 12 August 2013 by the letter dated 2 August 2013 which is also in evidence. This is not a case like that of Anami Holdings v Sandwell MBC [2018] EWHC 1913 (Admin) . Ms Rawlinson gave evidence as to the failure of her enquiries to establish the occupation by Fresh of Unit 5, but this is one of those cases in which the absence of evidence is not evidence: her searches of Wigan systems were revealed not to have been fully comprehensive, and it was such a long time after the Fresh licence was granted when the enquiries were pursued that it is hardly surprising that information was not obtained from Fresh. Accordingly, Fresh was liable for NDR as the occupier of the premises during that period, not PAG.

64. Thereafter, PAG became exempted from liability to NDR for a period of six months (i.e. until 12 February 2014) by reg.4(b) of the 2008 Regulations; and thereafter, Unit 5 was subject to the Scheme Lease granted to Murton.

65. Wigan claims NDR on Unit 5B for 22 May 2008 – 14 January 2010 and on Unit 5C for 15 January 2010 – 31 August 2010. On 28 September 2009, PAG granted Asda Stores Limited (“Asda”) a lease of Unit 5B (the “Asda Lease”) for a term commencing on 5 October 2009 and expiring on 31 December 2009, the validity of which is not disputed. Wigan’s inspection record from 10 November 2009 shows that Asda took up occupation of Unit 5B on a “temporary basis” for a “relief picking operation.” I accept that for the duration of the Asda Lease, Asda was the entity liable to NDR under s.43(1) of the 1988 Act . Upon the expiration of the Asda Lease, the six-month NDR exemption in reg.4(b) of the 2008 Regulations applied.

66. Clause 6 of the Asda Lease provided that the principal rent was inclusive of business rates and insurance costs which the landlord was to pay to the relevant authority or insurance company. The claimant placed some reliance on this, but it plainly does not affect the incidence of liability for NDR as regards the billing authority.

67. On or about 15 January 2010, Fresh then took up occupation of the whole of Unit 5B and Unit 5C. PAG wrote to Wigan on 26 January 2020 to advise Wigan of this. development. Fresh’s occupation was reported in the local press on 26 January 2010.

68. Fresh then took an occupational lease dated 30 July 2010 (the “Fresh Lease”) for a term of 10 years from and including 4 January 2010. There is no suggestion that this was not a genuine transaction. I accept that from 15 January 2010, and at all material times thereafter, Fresh was the entity liable to NDR for both Unit 5B and Unit 5C. Clarke Industrial Estate

69. Trafford claims NDR for Clarke Industrial Estate up to and including 24 August 2014. However, HM Land Registry Office Copy Entries show that PAG transferred its interest in the Estate to Alliance Real Estate LLP on 25 July 2014. It follows that PAG has no liability to NDR from then on. In cross-examination, Mr Kelly (the NNDR Senior Revenues Leader at Trafford) could not explain why PAG should be liable to NDR following the transfer. I conclude that it was not. Pt 1 st floor and Suite B

70. The layout of these hereditaments was a little confusing, but I am satisfied of the following. Of the three units on the first floor of Westgate House shown on the plan attached to the email dated 9 May 2012 from PAG, the two marked respectively ‘Gillespies’ and ‘1,250 sq ft’ originally formed one single hereditament under reference number 32623825, which from October 2011 was split into two, with reference numbers 32629350 and 32629375 as shown by the Schedule of Alterations to the Rating List dated 29 March 2012. The second of these hereditaments has a rateable value of £23,000. That is Suite B, which confusingly is sometimes referred to as ‘Pt 1 st floor.’

71. The other area on the plan marked ‘1,290 sq ft.’ is Pt 1st Floor, with reference number 32620550. Confusingly, this is sometimes described as ‘Suite A.’

72. Trafford claims NDR for Pt 1st Floor/ Suite A for 8 June 2012 – 1 June 2015. There was a scheme lease of this property to Browncross dated 8 June 2012 but on 3 January 2013, PAG wrote to Trafford to inform it that, “with effect from 1st January 2013, Dynamic Building Solutions took occupation of [Suite A]” [614]. I accept that, when billing NDR for Westgate House, Trafford must have mistakenly thought that Dynamic Building Solutions went into occupation of Suite B, rather than Pt 1st Floor. This appears from a comparison of the date of the end of the liability period with the term of the scheme lease. I conclude that there is no liability for Pt 1st Floor from and including 1 January 2013.

73. NDR is claimed for Suite B for 8 June 2012 – 31 December 2012. Suite B was subject to a Scheme Lease to Browncross until 2 June 2015. On 23 June 2015, PAG wrote to Trafford to inform it that, “with effect from 2nd June 2015, Fitzwilliam Capital Partners Limited took occupation of the above unit, previously let to Browncross Limited ...” I did not understand Mr Kelly to dispute this in the end, and in any event I accept that Fitzwilliam Capital Partners Limited was in occupation for the relevant period and that PAG was not liable for NDR on this hereditament from 2 June 2015. Demand Notices Proof of demand notices

74. As already noted, the obligation to pay NDR arises only upon service of a valid demand notice. The defendant accepted that the existence of the Wigan demand notices, all dated 13 January 2015, had been established; but denied that Trafford had been able to establish the existence of the demand notices upon which it needed to rely. Trafford produced a new schedule giving Particulars of the Demand Notices with trial bundle references. There were two page references for each alleged demand, the first of which takes the court to a bill from Trafford to PAG for NDR, and the second of which takes the court to a screenshot, or ‘snip,’ of Trafford’s electronic case management system, as described by Mr Kelly in his evidence. The date highlighted in the screenshots under the heading ‘Stage Date’ was the date regarded by Mr Kelly as the date of the demand notice. The demand notices themselves were not in evidence because, as he explained, they had not been retained by Trafford.

75. Mr Kelly was an honest and co-operative witness, but he did not have much first-hand knowledge. While he evidently had a good working knowledge of the case management system, his knowledge was not comprehensive. He was cross examined in detail about the completeness of the snips, and how the particular screenshots had been selected, and why others had not been, and about the meaning of the information displayed on the snips. He had not reviewed each of the many tabs in the Civica Open Revenues database, instead selecting those he thought likely to be relevant.

76. In cross-examination, he accepted that the stage date showing on his snips was the last date something happened on the system, and not necessarily the date of the bill; while the ‘entered date’ on other snips referring to NDR recovery bills was the date upon which the item was entered, not necessarily when the bill was issued.

77. I accept that Trafford’s evidence about the demand notices had not insubstantial weaknesses, skilfully exposed by leading Counsel for the defendant. Nonetheless, I consider that the claimant has established, on the balance of probability, that it had served the Trafford demand notices upon which it relies by the dates shown in the Particulars mentioned above, which range between 24 June 2014 and 15 July 2015. I reach that conclusion, on the basis of the inherent unlikelihood that Trafford would issue subsequent invoices without having first issued demand notices; the fact that demand notices are mentioned at points in the correspondence with Trafford; and the appearance from the snips, incomplete as they are, of entries in the relevant sums corresponding with the bills which were in evidence at dates predating those bills.

78. That, it seems to me, is sufficient for present purposes. It would not be realistic, I consider, to expect much more in the way of evidence, given the constraints on local authorities’ operations, the passage of time, the migration of data, and the non-retention of original records, even if, as I accept, disclosure obligations may have been imperfectly complied with. As soon as practicable

79. Reg 5 of the 1989 Regulations require the demand notices to be served as soon as practicable after the relevant dates. The defendant has identified the relevant dates for both Trafford and Wigan, and they appear not to be disputed. For Trafford, they lie between 28 January 2012 and 1 April 2015; for Wigan they lie between 23 May 2008 and 1 April 2013.

80. Evidently there is an interval of time between these dates and the dates upon which I have accepted demand notices were served.

81. The question is whether they were served as soon as practicable after the relevant dates. The claimants say they did not have the information to know to serve demand notices on PAG for some time, and when they did PAG directed them to the SPVs. Mr Mather accepted the claimants had not been told that PAG was using a rates mitigation scheme, was not told anything about those schemes, and was entitled to take at face value what they were told by PAG, and acted reasonably in doing so.

82. I accept that. The claimants were not told an NDR avoidance scheme was in operation. All they were told was that PAG had granted a lease to a company. It was not until sometime later that they were told that that company was in liquidation. In the case of Wigan, no liquidators were appointed, so Wigan was left to deal with the matter without any liquidator with whom to engage until 2011, when the SPVs were wound up on the petition of the Secretary of State. The liquidators of the SPVs concerned with Trafford asserted they were reviewing the leases to establish whether they held any value for the benefit of the liquidation, the lease had not been disclaimed, that the liquidators had been removed, and then in April 2013 that the companies were insolvent and would enter a new insolvency process. In my assessment, they were given the run around. I do not regard this as candid behaviour.

83. It was submitted for the defendant that it was always plain and obvious anyway that the scheme leases were granted as part of a liquidation NDR avoidance scheme. I do not accept this. Certainly, PAG never positively said they were not, but nor did it did let on that they were part of a scheme at all.

84. I accept the defendant’s submissions that the hallmarks of schemes 1 and 2 involved the following: empty properties; the grant of a lease of that property to a company; the company entering into liquidation at the same time as or shortly after the grant of a lease; and reliance on a statutory exemption from NDR. I accept, also, that it was not long after each of those events occurred that the relevant billing authority would have been aware of each of those facts. I do not accept that that simple awareness of each of those facts did in fact inform, or ought to have informed, the claimants that an NDR avoidance scheme had been employed, such that it was PAG, and not the SPVs, which was the proper recipient of demand notices (despite PAG’s asserting that it was not). It is not just a matter of knowing the identity of the person in rateable occupation. It is a matter of knowing on what basis NDR can be demanded. I therefore distinguish what was said in North Somerset District Council v Honda Motor Limited [2010] EWHC 1505 (QB) para [66].

85. That is all the more so where, as was accepted on behalf of the defendant, the basic factual elements would have been in the knowledge of only relatively junior employees who, I take it, would not have been qualified to recognise an NDR avoidance scheme even if, at a higher level, there may have been widespread awareness that such schemes existed to be deployed. For the avoidance of doubt, I do not regard that as an example of home-grown problems and inefficiencies rendering impracticable what would otherwise have been practicable in the sense employed in North Somerset District Council v Honda Motor Limited [2010] EWHC 1505 (QB) para [64].

86. I did not understand any of the witnesses called on behalf of the claimants actually to accept that it was or, in the circumstances which actually prevailed , ought to have been, blindingly obvious that a scheme was in use.

87. I take it that not immediately disclosing the deployment of a scheme was itself part of the scheme; and I am fortified in that conclusion by the consideration that scheme 3, with which this case is not concerned, included the novel development that the landlord explained to the council transparently that a scheme was being used, and did so because Norris J had identified a lack of transparency as “an issue” in the case mentioned above.

88. Accordingly, I consider that the demand notices were sent as soon as practicable after the relevant dates. Prejudice

89. I should nonetheless consider what the position would be if they had not been sent as soon as practicable after the relevant dates.

90. In North Somerset District Council v Honda Motor Limited [2010] EWHC 1505 (QB) Burnett J held as follows. “[60] In summary, therefore, a failure to serve a Regulation 5 notice as soon as practicable does not result in automatic invalidity. Rather, the court determining any issue resulting from such a failure will have regard to the length of delay and the impact of that delay upon the ratepayer, in the context of the public interest in collecting outstanding rates. The greater the prejudice to the ratepayer flowing from the delay, the more likely will be the conclusion that Parliament intended invalidity to follow. [61] Prejudice may flow to business ratepayers in any number of ways as a result of a late notice to pay rates. Prejudice is different from inconvenience … [The] prejudice relied upon must be substantial and certainly not technical or contrived … The countervailing public interest is in the collection of taxes, the interests of other tax payers and the revenues of the local authority concerned.”

91. The defendant argues that it has suffered substantial prejudice by reason of delay in serving the demand notice. It relies on three categories of prejudice. Limitation

92. The Claim Form in Wigan v PAG was issued on 1 June 2017, while the Relevant Dates in respect of Unit 5B and Unit 5C fell more than 6 years earlier. If Wigan had served the Demand Notices as soon as practicable after the relevant dates, it would have been more than 6 years before proceedings were issued, and they would have had a limitation defence. The defendant submitted that the delay deprived PAG of limitation defence.

93. But this is to assume that if demand notices have been served earlier, these proceedings would still have been commenced in June 2017. If demand notices been served earlier, the whole process would no doubt have been accelerated by the same amount of time.

94. Even if the primary limitation period would have expired, the claimant would at least have had a reasonable prospect of successful reliance on section 32 (1) (b) Limitation Act 1980 , to the effect that where relevant facts have been deliberately concealed the period of limitation does not run until the claimant has discovered the concealment or could with reasonable diligence have done so - the relevant fact being the existence and nature of the scheme deployed. I cannot accept, on that basis, that there was any substantial prejudice in the supposed loss of a limitation defence. Other steps to avoid or mitigate NDR liability

95. The defendant argues that if the notices had been served earlier, and a challenge to the schemes had been raised earlier, PAG would have used an alternative scheme or otherwise divested itself of the properties in order to avoid liability to NDR altogether.

96. This was never pleaded, and the witnesses who gave evidence about it were not directors of PAG. Mr Mather’s evidence on the point was equivocal: he said he couldn’t say what would have happened, and his evidence was of course that PAG thought the schemes worked, absent any Court decision that they did not. Once the challenge was made, the issue has been defended very vigorously. Accordingly I do not accept that had the claimants moved more swiftly, the defendant would have behaved any differently. In my view, it would not. Extravagant delay

97. The suggestion is that the delay in service of the demand notices was extravagant and unexplained, and that the defendant has a legitimate expectation, and arranges its affairs on the basis, that billing authorities will act in accordance with their statutory obligations so as not to surprise taxpayers with a substantial tax liability years after the event.

98. However, I have already found that there was no such delay. Had there been any, I should have found that it was nothing of which the defendant could complain, since it would have arisen from its own lack of candour. I would not accept that the defendant had been surprised in any event. Conclusion

99. Accordingly, I conclude that the schemes in this case were ineffective and will declare accordingly; and that the defendant is liable to pay NDR to the claimants in the sums respectively claimed, subject to my findings in relation to the specific matters identified in paragraphs 62-73 above. I invite the parties to agree a formal order, failing which a hearing will be arranged to deal with that and any other consequential matters.