Thousands of firms sued for rate arrears

http://www.bbc.co.uk/news/business-39041286

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Thousands of businesses across England and Wales were taken to magistrates courts last year for non-payment of their business rates.

The rates advisory firm CVS asked every local authority how many companies had been issued with a summons for the last financial year.

It found that nearly 200,000 businesses had been summoned to court.

That amounted to one in every eight businesses on average, with an even higher proportion in London.

The research also found that nearly half of firms issued with a summons went on to be referred to bailiffs for enforcement proceedings.

Middlesbrough borough council topped the list of authorities which issued the most summonses, with 25% of its businesses receiving a request to appear before the courts.

It was followed by the London borough of Waltham Forest with 22%.

Dartford borough council, Manchester city council, along with Ealing and Haringey councils in London, sued 21% of the their local businesses for non-payment.

The survey suggests that in London a total of 39,098 businesses were told to appear before the courts for non-payment of rates, a figure which represents 16% of all businesses in the capital.

CVS advises companies on their rent and rate valuations.

Its chief executive, Mark Rigby, said the figures he had collected highlighted how the system was criminalising struggling businesses.

"With budget constraints and deficits, we need to be more creative at the way we look at taxation so I am left in no doubt that business rates need to be looked at more holistically within the overall context of the economy, and other taxes, but not simply as a guaranteed revenue stream," he said.

Winners and losers

The next business rates revaluation comes into effect in England on 1 April - the first for seven years - along with similar changes in Scotland and Wales.

On average, all areas are seeing their rates fall, except London, where bills will rise an average 11% this year.

The government says that within the overall change, 510,000 ratepayers will see their bills increase, 920,000 will see their bills fall and 420,000 experience no change.

Mr Rigby said this meant that in London businesses would end up paying an extra £9.4bn over the next five years.

The government has come under increasing pressure to soften the blow for the businesses which will receive higher bills.

Although more firms will benefit than lose, the changes are causing controversy because some firms will see huge bill increases over the five years in which the increases will be phased in.

Business rates are based on property values which are revalued every five years.

However the government delayed the last revaluation by two years, which means April will see the burden shifting for the first time in seven years, and which has produced some dramatic swings.

This latest research from CVS will add to the pressure for a fundamental rethink of the tax, which campaigners say is outdated for the digital age.

The Freedom of Information (FOI) request was sent by the firm to all the 347 billing authorities in England and Wales.

A total of 280 councils responded, covering 1.6 million properties, or 83% of all those liable for business rates.

A government spokesman said: "The vast majority of businesses pay their bills on time and more than 98% of business rates are collected."

"It's only fair on hard-working taxpayers that councils chase up all outstanding debts."