Tax & admin 23 May 2016

Business rates: What to do after receiving a summons and liability order for non-payment

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Small business owners can negotiate a business rates payment plan with local councils

Business rates specialist Mark Allen gives his advice to small business owners on what to do upon receiving a summons and liability order for the non-payment of national business rates.

A bill for business rates will be sent to your company’s address and, usually, if your business rates are not paid on time, the local council will send you a reminder notice asking for payment.

If you do not pay within the time period specified, the council will send you a final notice. The process is slightly different from the collection of usual business-to-business debt, where the time to pay is often longer.

As a small business owner, you can offer to pay or negotiate a payment plan before the local council applies for a summons to be issued. The summons is the action councils take before sending out a liability order which, once issued, means you will have to pay the whole amount due for that year as specified on the final reminder, which may include any arrears from previous years.

If your local council decided to apply for a summons and one is issued, a court date is arranged for a hearing. It should be noted that the council can make you pay for the costs incurred by them for obtaining the summons, and the following liability order. So before the court hearing it is advisable to contact the council to explain the situation or dispute the bill if you believe it to be incorrect.

If all is well and you do initiate contact with the council’s relevant department to explain your situation and why you have not paid, or are disputing the amount owed, negotiating a payment plan can then take place.

Councils can cancel the summons and payment plans can be put in place, or councils may decide to accept the reasons given for disputing the bill and amend the amount owed. If you struggle to agree terms with your council regarding a dispute or payment plan, you may need the help of a business rate advisor.

The council will state that you, the business owner does not have to attend the magistrate’s court regarding the summons if you do not wish to do so. If the recipient of the bill decides not to attend the court and represent themselves, or engage with a solicitor to represent them, a liability order will be automatically issued in their absence.

You may then have missed an opportunity to explain the situation as to why the bill has not been paid and to ask for an appropriate plan or arrangement. All efforts should be made to attend the court and to explain the specific situation and ask for more time if needed, or a payment plan to settle the amount outstanding, or an amended bill if successfully disputed.

Once the liability order is issued the council can then notify and instruct a bailiff to recover the dept. The bailiff company concerned can then chase the debt and make a charge on you for the costs of doing so on top of the original debt, which may include any other costs incurred by the council concerned whilst pursuing the debt. If you find yourself in such a position a business rate advisor may be able to help.

The course of action used by some councils can seem to have been refined to meet their specific needs as regards budgetary pressures, in order to pay for services provided to local communities. It should be remembered that councils also have obligations and debts or bills to pay themselves.

Mark Allen – Meng, PGCE. Operations.

Want to learn how to better manage your business rate responsibilities? Read our expert’s introductory guide to business rates.

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