Councils sue 750 firms a day over business rates

During the 2018/19 financial year, 190,000 non-domestic premises such as shops and restaurants in England were brought before the Magistrate Courts for non-payment of their business rates.

Property adviser Altus Group submitted a Freedom of Information Act request to all English councils on how many businesses had been summonsed between 1 April 2018 and 31 March 2019, with details being provided on 1,740,073 out of the 1,933,963 non-domestic properties liable for business rates.

The responses, which cover 90 per cent of all properties on the Local Rating Lists, showed a total of 171,018 summons were issued, being 9.83 per cent of all premises. Altus Group forecasted that the overall number likely to have been in the region of 190,070, around 750 every working day.

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

In terms of percentage of premises sued it was Richmond & Wandsworth - 27.6 per cent; Islington - 23.3 per cent; Middlesbrough - 23.3 per cent; Liverpool - 22 per cent; and Bracknell Forest - 20.3 per cent.

From April 2017 at the last revaluation, 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 showed that, as a result of the changes to small business rates relief, 678,163 out of the 1,933,963 premises - more than a third - were completely exempt from rates all together in England and had no bill to pay.

Property taxes in the UK, as a percentage of overall taxation, are the highest across the whole of the European Union, at more than double the EU average.

Robert Hayton, head of UK business rates at Altus Group, says that the government’s reliance upon property for tax revenues is 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 per cent of firms, almost one in six with an actual bill, received a summons to appear before a Magistrate during the last year.”

Hayton added that major retail and hospitality businesses were reducing their estates and headcount, often citing high level of rates as a contributory factor.

Just last week, three separate financial updates from shopping centre owners cited this trend as a reason for retailers shutting shops and rental income falling.

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 per cent to 50.4 pence on 1 April for 2019/20, the first time the tax rate for business rates in England has gone above 50 per cent.

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