An exclusive investigation by real estate advisor Altus Group reveals that, last year, during 2017/18, under the first year of the new business rates revaluation, nearly 200,000 business premises liable for business rates were hauled before a Magistrate for non-payment of their business rates fuelling claims that the system is criminalising firms struggling to cope with the ever increasing tax burden.
Under the Freedom of Information Act, all Councils in England were asked to provide details of how many businesses had been summonsed between 1st April 2017 and 31st March 2018 with details being 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 properties, show a total of 129,306 summons were issued being 9.9% of all premises with Altus Group forecasting that the overall number to likely to have been in the region of 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.
Leaving 1,246,178 business premises with actual rates demands, the revelations reveal 15.16% of firms, almost 1 in every 6 commercial property with a bill, received a summons to appear before a Magistrate last year.
Birmingham City Council summonsed 7,044 firms whilst Liverpool City Council hauled 3,538 businesses before the Courts.
Tower Hamlets, Leeds, Bradford, Sheffield, Bristol and Camden Councils all summonsed over 2,000 local firms.
Robert Hayton, Head of U.K. Business Rates at Altus Group, says the findings go way beyond simple tax avoidance citing the compound effects of inflationary rises and tax reductions being denied at last year’s revaluation as being problematic for firms:
“Annual inflationary rises for the 7 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 £847 million from 1st April 2018 to £24.8 billion according to the Ministry of Housing, Communities and Local Government.