Councils take almost 150,000 firms to court over business rate arrears

By Stuart Stone contact

- Last updated on GMT

High bills: Altus Group's investigation showed almost one in six businesses liable for rates appeared in court over arrears
High bills: Altus Group's investigation showed almost one in six businesses liable for rates appeared in court over arrears
An investigation by real estate adviser Altus Group found that nearly one in six commercial properties liable for business rates appeared before a magistrate for non-payment during the 2017-18 fiscal 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 2017 and 31 March 2018.

Details were provided by 212 councils on 1,302,234 of the 1,902,148 business properties liable for rates.

The responses, which cover 68% of all liable properties, show a total of 129,306 summons were issued, though Altus Group forecasts that the actual number could be closer to 200,000 properties.

Analysis of official Government data shows that 655,970 out of the 1,902,148 premises were completely exempt from rates all together leaving 1,246,178 business premises with rates demands.

Altus Group's finding revealed that 15.16% of firms, almost one in every six commercial properties with a bill, received a summons to appear before a magistrate last year. 

As property details supplied by councils were not broken down by property type, the investigation does not reveal the exact number of pubs required to appear before magistrates over rate arrears.

From 1 April, pubs have seen average rises of £878, or 5.6%, despite the £1,000 pub discount being applied both before and after last year's revaluation.

Disproportionately high bills

Altus Group head of UK business rates Robert Hayton explained that the effects of inflationary rises and tax reductions being denied at last year’s revaluation had been problematic and left business across all sectors facing financial burdens.

“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 that 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.”

The councils that issued the highest number of summons were Birmingham City Council, which summonsed 7,044 firms, and Liverpool City Council, which summonsed 3,538. 

Tower Hamlets (London), Leeds, Bradford, Sheffield, Bristol and Camden (London) councils all summonsed in excess of 2,000 local firms.

The investigation by Altus Group across all business sectors follows news reported by The Morning Advertiser ​that the hospitality sector is 'overpaying' on business rates to the tune of £1.8bn,​ and that more than 100 MPs have called on the Government to take action to reduce the tax burden​ on pubs.

Related topics: Legislation

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