Monday, November 16, 2015

News: Council gets tough on business rates


Rotherham Council has engaged solicitors to pursue companies seeking to avoid business rates - even petitioning the High Court to have some wound up in order to recover debts.

Business rates are a tax based on property values and help pay for public services. Local councils collect Non Domestic Rates (business rates) from the owners and occupiers of commercial properties on behalf of central Government.

The authority already estimates a "budget challenge" of £41m - where further savings will need to be made over the next three years. Grants from central government could be reduced by 40% as early as next year.


The Council has engaged Greenhalgh Kerr Solicitors, experts in specialist rating assistance, to pursue companies seeking to avoid business rates. Since this exercise began, in August 2013, the Council has managed to collect approximately £369,000 from approximately 27 companies, mainly through companies falsely claiming full / part charitable status.

For 2014/15, Rotherham Council's income from business rates was £73.925m (allowing for mandatory and discretionary reliefs) on behalf of central Government. Of the income, it retained £36.940m and was given £24.391m in Business Rates grants from the Government. Non Ring-fenced government grants amounted to £82.446m.

One case involved a Rotherham building which had apparently been sold to new owners in 2002. However the property had never been registered in their name at Land Registry. It appeared empty and no business rates had been paid on it since the empty charge began to accrue in 2008. Debtors were traced and claims went through the County Court but to no avail.

The property subsequently went up for auction and negotiations eventually took place with the debtors' solicitor leading to a settlement deal where the debtors agreed to pay the full debt and all legal and repossession costs.

In another case, Rotherham Council were owed approximately £85,000 in unpaid business rates relating to a small independent supermarket. The property had been purportedly occupied by a series of similarly newly formed limited companies - all had occupied for a period of between six to nine months and none had paid any rates on the property since 2009.

Liability order proceedings were commenced against the landlord who it transpired had been advised by accountants to facilitate the forming of the "off the shelf" limited companies for the purposes of trading the business and in particular to limit exposure to business rates. Over 90% of the outstanding historic rates were paid by the landlord, together with the Council's legal costs, and a full lease provided in respect of the current occupier of the premises who is maintaining the payment of rates on an ongoing basis.

In recent months, Rotherham Council has petitioned the High Court to wind up Avro Developments - the company behind the redevelopment of the vacant Howard Building; Eddi Consulting Ltd - a company that appears to be liable for the business rates for the empty Horizon building at Manvers; and Smiths Autos at Kilnhurst which has since gone into liquidation.

Petitioning to put the company out of business is as serious as it gets in a creditor's attempt to recover the money it is owed.

Images: RMBC


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