Council To Write Off £800k Of Bad Business Rates Debt

Published on: 2 Mar, 2013
Updated on: 5 Mar, 2013

GBC’s website gives advice for Business Ratepayers

The Guildford Borough Council (GBC) Executive has decided to write off more than £827,000 of Business Rate debts that have been deemed irrecoverable.

A GBC report showed that among the list of 17 debts to be written off are:

£276k from two companies ‘Amwich Ltd’ and ‘Whiteswan Properties Ltd’, believed to be linked, formerly connected with Dolphin House and its car park, the companies have no assets and are based in the British Virgin Islands, GBC have concluded that there is no prospect of receiving any payments;

£58k from ‘The Print Factory’ formerly at Midleton Industrial Estate, the company went into administration and GBC were informed that they would not receive a dividend;

£32k from ‘Cambio (SH) Ltd’ formerly of South Hill, the company went into administration and it is been reported that there is no prospect of a dividend;

£31k from a former publican, who cannot be traced, who ran the the Harrow Inn at Compton.

The council acts as the collection agent for business rates and passes on over 90% of the business rates collected to a central pool. The government redistributes the funds to local authorities on a per capita basis.

GBC wants to clear the books of the bad debts before a new system is brought into effect which will allow local authorities to retain 50% of any increases to Business Rates but will also penalise them by charging a percentage of the write off value of any irrecoverable debts. For GBC the percentage will be 40%, Surrey County Council will pay 10% and central government the remaining 50%.

Overall in Guildford 4,200 businesses will pay £80 million in rates in this financial year and collection rates have remained consistently over 99%.

Most bad debts are the result of insolvency which restricts debt recovery action by the council but other debtors intentionally provide misleading information or fail to report business start up. This can cause back dated billing and insolvency can then occur before the amount owing has even been determined.

Cllr Caroline Reeves (Lib Dem, Friary & St Nicolas), noting that several of the debts itemised were historic, asked why the process of recovery took so long.

Lead Councillor for Finance Cllr Nigel Manning (Con, Ash Vale) replied that it was because the recovery process is lengthy and exhaustive: “But GBC has one of the highest, if not the highest, collection rates in the country at around 99.5%. But businesses do fail and some deliberately go missing, leaving arrears behind.”

Because of the looming change of system and GBC’s liability, in future, for 40% of unrecovered Business Rate debts, Cllr Manning added, “It is good housekeeping that we do this now, at this stage.”

The Executive approved the write off of the business rates debts, as recommended by Cllr Manning, unanimously.

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