200,000 companies sued over business rates

Over 200,000 businesses were taken to a Magistrates court for failing to pay for businesses rates under the first year of the new business rates revaluation, an investigation has revealed.

Real estate advisor Altus Group collated information procured under the Freedom of Information Act (FOI) from all councils in England. They were asked to provide details of how many businesses had been summoned between 1 April 2017 and 31 March 2018. Details were provided by 212 councils on 1,302,234 out of the 1,902,148 business properties liable for rates.

The responses, which cover 68% of all UK properties, showed that a total of 129,306 summonses were issued, accounting for 9.9% of all premises. Altus Group has forecasted that the overall number to likely to be around 188,883.

From last year, businesses with only one property liable to business rates were exempt if the rateable value was £12,000 or less up from £6,000. Analysis of official government data by Altus Group show that, as a result of the changes to small business rates relief, 655,970 out of the 1,902,148 premises were completely exempt from rates all together and did not receive a bill.

Almost one in six commercial properties with a bill received a summons to appear before a Magistrate last year.

Robert Hayton, head of UK business rates at Altus Group, said that the findings go “way beyond simple tax avoidance” and said the effects of inflationary rises and tax reductions being denied at last year’s revaluation was “problematic” for firms.

Hayton said: “Annual inflationary rises for the seven years prior to the revaluation pushed the tax rate from 41.4p in 2010/11 to 49.7p in 2016/17 meaning a rise of 20% in bills even before the revaluation came into effect creating financial pressures.

“Add to the mix the current, deeply unfair, system of downward transitional relief which severely limits the amount by which bills can go down, meant many businesses ended up paying disproportionately high bills in locations where local economies were underperforming and values had fallen.”

Business rates rose further by 3.5% overall up by an extra £847m from 1 April 2018 to £24.8bn according to the Ministry of Housing, Communities and Local Government.