A STRANGER-than-fiction tax tactic is giving new meaning to the host of shell companies operating across the West End.

Snail farms have been set up in offices by a company in a bid to be excused from paying business rates. Westminster City Council says it has investigated buildings in Old Marylebone Road with sealed boxes containing snails.

The boxes are used as part of a claim that the property is designated as agricultural use, meaning it is exempt from business rates.

The city council says it is forced to go through a complex procedure of winding up the companies only for new ones to be set up.

Leader Cllr Adam Hug said: “In the last fortnight we have discovered more boxes of snails in empty office buildings in Westminster so there is little sign of this racket slowing up. Rather than unscrupulous traders dropping on one avoidance scheme after another, it would be good to see a general clause on business rates avoidance and evasion which stops these kinds of activities in their tracks.

“As a local authority with limited resources, we enforce wherever we can.”

He added that it was a “ludicrous notion” to suggest the office was in fact used as a snail farm.

The director of the companies involved is facing an investigation on whether he should be barred from holding any future roles with companies, the council said.

The city says it is has wound up four snail companies and two more are in the process of being shut down.

The ruse follows a trusted system where the council is informed that an empty property is occupied by a snail farm.

The building is usually an empty office. When they inspect the property, it is found to be empty, with the exception of a relatively small number of sealed boxes (see picture).

In order to achieve an exemption as a snail farm an application must be made to the Valuation Office (an agency of HM Revenue and Customs).

But no such application is ever made, presumably on the basis that the Valuation Office would inevitably reject it.

The council then approaches the company occupying under the lease from the landlord until the company is wound-up.

No rates are paid in the length of time it takes to go through the bureaucratic process.

The shell company has no assets and therefore the insolvency practitioner or liquidator cannot distribute any funds to creditors.

Another company is set up and the process starts again.

The city council said snail farms are not the only loophole in the tax exemption system that is in need of reform.