Councils sue 750 firms a day struggling with business rate arrears

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Around 190,000 shops, pubs and other firms have been sued by councils in the past year for struggling to pay rising business rates, according to new data.

That equates to 750 firms every working day who were taken to court for non-payment of their business rates during the 2018/19 financial year.

Under the Freedom of Information Act, all councils in England were asked to provide details of how many businesses had been summonsed between 1 April 2018 and 31 March 2019.

As reported by ITV, real estate adviser Altus Group found that around 190,000 business premises were hauled to court over the non-payment of rates during the last financial year.

The top five summonsing councils, by volume, were Westminster (6,882), Birmingham (6,166), Manchester (5,228), Liverpool (4,254) and Leeds (3,497).

Pressure on businesses

The data revealed that 9.8% of all non-domestic premises were issued summons by local councils over business rates arrears.

With high streets across the country affected by soaring business rates, rising rent prices and a decline in customer confidence, the shocking figures highlight the current pressures on UK businesses.

Bev Budsworth, MD and licensed Insolvency Practitioner of The Business Debt Advisor said: “Many retailers’ finances are in dire straits and the impact of business rates only makes survival more difficult.

“The whole system of how business rates are charged should be overhauled to ensure that the system is fair and the burden is shared by all businesses including those who operate online.”

Figures also suggest that property taxes in the UK, as a percentage of overall taxation, are the highest across the European Union at more than double the EU average.

Is the situation going to get worse?

Altus Group also noted that the situation is likely to get significantly worse over the next year as business were hit with a further increase to business rates in April.

Robert Hayton, head of UK business rates at Altus, added that the Government’s reliance on property for tax revenues is too great.

He said: “With 1,255,800 of non-domestic premises actually having rates liabilities to pay, almost one in every six with an actual bill received a summons to appear before a magistrate during the last year.

“Major retail and hospitality businesses were reducing their estates and headcount, often citing high level of rates as a contributory factor, whilst other sectors, such as manufacturing, were hurting too.”

He added that a “tax stimulus is desperately needed” to address the issue.

The standard rate of tax, which applies to all medium and large premises in England with a rateable value over £51,000, rose by 2.4% to 50.4p for the current financial year.

However, a Government spokesperson said ministers are committed to assisting small businesses on the high street and plan to cut business rates by £13 billion over the next five years.

He said: “Our £3.6 billion towns fund announced by the Prime Minister last month will support towns and town centres, allowing them to attract greater footfall, jobs and investment.

“This includes making £1 billion available as part of the future high streets fund to directly help high streets adapt to the changes we are seeing in shopping habits.”

Business rate relief

Some properties are eligible for discounts from their local council on their business rates.

You can check with your council if you are eligible for any of the following:

  • small business rate relief
  • rural rate relief
  • charitable rate relief
  • enterprise zone relief
  • hardship relief
  • retail discount

For instance, small business rate relief means you won’t pay any business rates on a property with a rateable value of £12,000 or less and for properties rated between £12,001 and £15,000 you’ll get a reduction.

When you get a second property, you’ll also keep getting any existing relief on your main property for 12 months.

If have concerns regarding the overall stability of your business, then you may qualify for one of our business debt solutions such as administration, liquidation or a CVA.

Has your business been affected?

If your business has been affected by rising business rates or you are feeling the pressure , then please fill out our Contact Formand we will be in touch.

Alternatively, call our FREE ADVICE LINE on 0800 781 0990 or chat to us online.

Our team has extensive experience in dealing with businesses across all sectors and can arrange an initial consultation at no cost, usually on the same day.

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