Tax & admin · 16 October 2017

One in eight UK firms summoned to court for business rates non-payment last year

Business rates review
Some 500,000 small companies have seen business rates bills rise

A total of 164,757 UK business owners with premises liable for business rates were ordered to attend court last year due to business rates non-payment, according to data obtained through a Freedom of Information Act request.

Fuelling claims that the tax system is criminalising struggling business owners unnecessarily, business rates advisory firm CVS discovered that as many as one in eight owners received a summons to appear in front of a magistrate across England and Wales during the 2016/17 tax year.

The exclusive investigation showed that in general, owners struggle to grapple with the burden of business rates, whilst bracing themselves for a £1.2bn tax hike expected for 2018 – the result of higher than forecasted inflation.

A total of 258 local authorities provided CVS’s investigation with details on 1.43m out of the possible 1.9m premises liable to pay business rates in England and Wales.

Based on all eligible premises, the investigation concluded that the number of UK business owners summoned to court could have been as many as 220,324.

Councils in the North of England proved to have had to issue the most summons for business rates non-payment in the last financial year. North Tyneside council, for example, ordered one in three business owners to court, issuing 1,838 summonses in total.

Meanwhile, Middlesbrough Borough council issued a total of 1,129 summons orders, amounting to one in four local business owners in total.

The investigation also looked at the number of businesses hauled before magistrates since the first UK business rates revaluation in seven years took place last April. In the first five months under the renewed business rates rules, 81,093 premises have already been summoned to court.

Since April, Middlesbrough Borough council and Islington council in London have issued court summons to one in seven businesses, as central government has admitted that some 500,000 small companies, including shops, cafes, restaurants and pubs, have seen business rates bills rise.

In light of the investigation’s findings, chief executive of CVS, Mark Rigby, claimed that the government should freeze business rates rises net year to enable a higher proportion of businesses to cope.

Urging Philip Hammond to “be bold” in his Budget announcement next month, Rigby said that against a backdrop of some of the highest property taxes in the world, the chancellor should introduce “an unprecedented stimulus of freezing rates rises in April 2018”.

Outlining Britain’s current economic woes, Rigby added: “Brexit is driving inflation. Import prices have risen given the fall in the pound with prices rising faster than wages causing households to ‘tighten their belts’ on spending, especially on ‘big ticket’ items. Business investment has slowed and confidence fallen.”

Business rates hike could lead to “tsunami” of high street closures

Sign up to our newsletter to get the latest from Business Advice.



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

On the up