One in ten firms sued for business rates arrears

Around one in ten businesses in England were sued by their local authorities over the past year for failing to pay rising business rates, new data suggests. According to real estate consultancy Altus Group, around 750 businesses were sued each working day. The real estate group said the figures highlight the cost pressures on UK businesses, as the occupies of around 190,000 commercial properties came to court over the non-payment of rates during the last financial year. The report claims that the occupiers and owners of offices, shops, pubs and restaurants have called for cuts to business rates. According to Altus Group, the standard rate of tax, which applies to all medium and large premises in England with a rateable value of more than £51,000, rose by 2.4 percent on 1 April 2019.

Using the Freedom of Information Act, all councils in England were asked to provide details of how many businesses had been summonsed for late payment of business rates between 1 April 2018 and 31 March 2019. Details were provided on 1,740,073 out of the 1,933,963 non-domestic properties liable for business rates. The responses, which covered 90 percent of all properties on the local ratings list, show a total of 171,018 summons were issued, 9.8 percent of all premises. The report from Altus Group concludes that the overall number was likely to be have been about 190,000 – about 750 every working day by extrapolating this data.

Altus Group analysed official Government data and found, as a result of the changes to small business rate relief, 678,163 of the 1,933,963 premises were completely exempt from rates all together in England and had no bill to pay.

Altus Group head of UK business rates Robert Hayton said the Government’s reliance on property for tax revenues was too great with the findings going beyond simple tax avoidance. “With 1,255,800 of non-domestic premises actually having rates liabilities to pay, in real terms 15.14 percent of firms, almost one in every six with an actual bill received a summons to appear before a magistrate during the past year,” he said. “A tax stimulus is desperately needed. Major retail and hospitality businesses were reducing their estates and head count, often citing a high level of rates as a contributory factor while other sectors, such as manufacturing, were hurting too.”

Image: Manchester Town Hall by Mark Andrew