A Labour councillor in North Herts has resigned after the Local Democracy Reporting Service (LDRS) learned that a company she co-owns, which operated a business rates avoidance scheme, is linked to claims for rates relief within North Herts.

Sarah Lucas was elected to represent Royston Palace ward in October 2024 and is co-owner of Principled Offsite Logistics Ltd (POLL), a company that offers schemes designed to help landlords avoid paying business rates on empty commercial properties, including by moving boxes into otherwise empty buildings.

Information obtained by the LDRS reveals that, between 2021 and 2026, landlords of buildings in North Herts were able to claim empty property rates relief worth a total of £102,093.14 after POLL had temporarily taken over as the ratepayer.

Business rates are collected by councils and shared with other local authorities and the government.

Of the £102,093.14 relief between 2021 and 2026, £48,259.18 relates to periods that overlapped with Ms Lucas's time as a councillor.

The revelation comes after the Court of Appeal ruled against POLL in a landmark case concerning a scheme in London in which boxes were moved into otherwise empty offices to secure business rates relief.

Landlords of empty commercial properties are entitled to a three-month exemption from business rates – or six months for industrial premises – but, once this expires, they normally become liable to pay full rates, even if the property remains empty.

However, they can claim a further period of relief if a property is occupied for a qualifying period before returning to its empty state.

Companies across the country, including POLL, had offered 'box shifting' schemes where they moved boxes into otherwise empty buildings, so they could be treated as occupied for business rates purposes.

However, the Court of Appeal ruled that POLL's arrangements in the case before it did not constitute 'beneficial occupation', because their only purpose was to secure rates savings.

Data provided by North Herts Council shows that rates relief was eligible to be claimed on multiple occasions at premises within the district after a period of 'beneficial occupation' by POLL.

One unit at the Glover Centre on Bury Mead Road, for example, saw eight separate periods of eligibility for rates relief between September 2021 and December 2024, worth a total of around £8,500.

At another property in Bury Mead Road, POLL claimed beneficial occupation between May and August 2025, and again from February to May 2026. The landlord was then eligible to claim empty property rates relief worth £4,368 between August 2025 and February 2026, and a further £5,135 between May and November 2026.

At a unit in Eastcheap in Letchworth, three separate periods of eligibility for rates relief followed POLL's occupation of the property, all beginning after Ms Lucas was elected as a councillor. The total relief eligible to be claimed across the three periods was £11,638.

Further periods of eligibility for rates relief worth £15,773 occurred during 2025 and 2026 at a property in Wilbury Way in Hitchin following two periods of beneficial occupation by POLL.

Ms Lucas resigned as a councillor on November 4 after the LDRS learned that POLL was linked to rates relief at premises within North Herts but before the extent of that relief had been confirmed.

Ms Lucas had already resigned as vice-chair of the council's finance, audit and risk committee after the Court of Appeal ruled against POLL.

The former councillor has been POLL's director of finance from 2018 onwards, and has owned 50% of the company since 2024, which was declared on her register of interests with North Herts Council.

Following the Court of Appeal's judgement, the government wrote to local authorities across the country asking them to "review whether box shifting schemes, and other schemes where the object of the occupation is rates avoidance, should continue to be recognised as occupation for rating and withdraw relief where they conclude it is not".

A spokesperson for North Herts Council said that all empty property rate reliefs connected to POLL had been "properly considered against the legislation and precedent applicable at the time".

They added that after the Court of Appeal ruling they are "no longer accepting such applications for occupation and subsequent empty property rate relief".

The Labour leader of the council, Val Bryant, said: "We expect the highest standards from all of our elected officials, and it is right that Sarah has resigned as a councillor."

Cllr Bryant, who had previously declined to support a suggestion from the Liberal Democrat opposition that she should ask Cllr Lucas to resign, did not provide an answer when the LDRS asked when she first became aware that POLL was linked to premises in North Herts that were eligible for rates relief.

Liberal Democrat group leader Ruth Brown said she was "shocked" to "discover that North Herts Council lost revenue as a direct result of the work of POLL, co-owned by Cllr Sarah Lucas".

Cllr Brown added: "I am pleased that she has finally done the right thing by resigning. Her position was no longer tenable once people knew that this had been going on."

She suggested that Ms Lucas's actions "did not fit with the Nolan principles", the set of ethical standards that are supposed to guide elected representatives across the country.

The leader of the council's Conservative group, Ralph Muncer, said it was "outrageous that someone who was entrusted by the public to act in their best interests and was given responsibility for scrutinising the council's finances" had been involved with a company operating "a rates avoidance scheme which took money away from the very communities she was elected to represent".

Speaking before Cllr Bryant's latest statement, he continued: "This represents a profound breach of public trust and the response from the Labour leadership in North Herts raises serious questions about its commitment to the standards the public rightly expect of those holding elected office.

"Not only did Labour fail to remove the whip [after the court ruling], but what is perhaps even more remarkable is that the Labour leader of the council has failed to condemn this practice."

The Court of Appeal judgment against POLL related to 2 America Square, a seven-storey London office block leased by 48th Street Holdings Ltd.

Under the scheme used at 2 America Square, at the end of each three-month period of rates relief, POLL were granted a lease on the empty offices at a peppercorn rent and placed boxes inside so they could claim it was occupied.

After six weeks, the boxes would be removed, and the lease would return to 48th Street.

But Lady Justice Falk ruled: "'Occupation' for, in effect, the sake of it, and which has no use, value or benefit other than rate saving, does not amount to occupation for the purpose of the statutory scheme."

POLL, which had previously defeated two court challenges to the scheme's legitimacy, have since lodged an application with the Supreme Court, asking for permission to appeal the Court of Appeal's decision.

A by-election to replace Ms Lucas has been called for December 17.

There are currently 22 Labour councillors, 19 Liberal Democrats, seven Conservatives and one independent, with two vacancies.

Ms Lucas was contacted for comment on this story.