Tough Recovery of Business Rates

Councils to Take Action to Recover Business Rates

April 2013 has seen changes in the way business rates are pooled and distributed throughout the UK to local councils / authorities.  At present, all businesses (shops, warehouses, offices and factories) pay a tax to their local council, referred to as ‘business rates’. All business rates are then pooled nationally into a treasury pot and redistributed to the local authorities through a complex formula grant.  From 1 April 2013, a 50-50 split has come into action, whereby instead of all business rates being sent to central government, just 50% of each authority’s business rates will be pooled.  Councils will then retain the other 50% of the total rates generated within their locality.  The increased reliance upon the business rates under the new scheme evokes an incentive for local authorities to ensure that their business rates are being paid.  Given that local authorities are able to distrain for unpaid taxes, the non-payment of business rates cannot be ignored.

 

Are Your Rates Overdue?? – If so, Are You Prepared to be Sued?

If you have received a letter of warning from your local authority and continue to withhold payment, the Council will begin court proceedings to obtain a liability order to recover their debts.  If the court is satisfied that the business rates remain unpaid, a summons will be served demanding payment of your total outstanding business rates, plus associated court costs.  If the debt remains unpaid, a liability order will be granted, and the council will commence enforcement.

 

Distraint Likely – Even After a Winding up Order

Distraint is the most common enforcement method employed by councils and refers to the seizure of business assets (and auctioning them in settlement of the unpaid debts).  Local authorities have the right to distrain for their unpaid taxes, including after a winding up order is made.  Once the council has obtained a liability order, they can visit your property at any time and are legally entitled to enter, through a window or unlocked door for example.  They will create an inventory of company assets, including necessary tools of the trade and vehicles for auction. You will be expected to sign a notice of acceptance and offered 5 days to repay Company debts plus costs in full. If the 5 days pass without payment, the items will be removed and sold at auction. Any attempt to sell the assets in the meantime is a criminal offence and can lead to prosecution.

We expect to see a significant escalation in the collection of outstanding business rates, with new due amounts not being tolerated.  Persistent non-payment has serious consequences.  we work closely with business partners who can help deal with business rate debts such as solicitors and rating review companies.  Therefore, if you have received a reminder notice you should seek our advice as a matter of urgency free on 0800 612 6197.

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