An investigation by the real estate adviser Altus Group reveals that, during the last financial year of 2018/19, 190,000 non domestic premises such as pubs, shops, restaurants and offices in England were hauled before a Magistrate for non-payment of their business rates fuelling claims that the system is seen to be 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 2018 and 31st 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% of all properties on the Local Rating Lists, show a total of 171,018 summons were issued being 9.83% of all premises with Altus Group forecasting that the overall number likely to have been in the region of 190,070, around 750 every single working day.
Top 5 Summonsing Councils By Volume
Westminster – 6,882
Birmingham – 6,166
Manchester – 5,228
Liverpool – 4,254
Leeds – 3,497
Top 5 Summonsing Councils By Percentage of Premises Sued
Richmond & Wandsworth – 27.6%
Islington – 23.3%
Middlesbrough – 23.3%
Liverpool – 22%
Bracknell Forest – 20.3%
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 show 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 being more than double the EU average.
Robert Hayton, Head of U.K. 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 explaining “with 1,255,800 of non domestic premises actually having rates liabilities to pay, in real terms 15.14% of firms, almost 1 in every 6 with an actual bill, received a summons to appear before a Magistrate during the last year.”
Hayton added “a tax stimulus was desperately needed” saying “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.”
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 on 1st April for 2019/20, the first time the tax rate for business rates in England has gone above 50%.