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Sunday 15 September 2019

Businesses bracing for £1.2 billion tax hike in 2018 as court cases mount

Companies are already being taken to court for failing to pay business rates.

London skyline
London skyline

By Kalyeena Makortoff, Press Association City Reporter

Businesses in England and Wales are bracing themselves for a £1.2 billion tax hike next year, while a staggering number of companies are being dragged to court for failing to keep up with climbing payments.

Business rates specialist CVS expects a hefty rise in business rates next year, as the September Retail Price Index (RPI) – used to determine the following year’s increase – is set to come in at 4% when official figures are released on Tuesday.

It means the Government could rake in an extra £1.2 billion in business rates – which are calculated based on the rateable open rental value of a premises – on top of the £23.9 billion it is expected to bring in from English businesses this year.

The move is expected to increase hardship among English and Welsh companies, many of which were left reeling following the revaluation of business rates earlier this year, which accounted for property price changes over the last seven years.

Nottingham court

Furthermore, a Freedom of Information request filed by CVS and seen by the Press Association shows that 164,757 business premises in England and Wales were hauled before a magistrate in 2016/2017 after failing to pay their business rates.

It means that around one in every eight businesses received a summons on those grounds from their local council, CVS said.

North Tyneside Council in the North East issued the greatest number of summons at 34% of businesses, while Middlesbrough Borough Council, London’s Borough of Haringey, and Luton Borough Council issued summons to 27% of businesses within their jurisdictions.

In the current financial year alone – counting the period from from April 1, when the controversial business rates revaluation took place, to the end of August – a total of 81,093 businesses have been summoned to court for failing to pay their business rates.

CVS chief executive Mark Rigby is now calling on Chancellor Philip Hammond to freeze 2018 business rates as part of his Autumn Budget next month, saying the economic environment is already punishing struggling businesses.

“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.

“Against this backdrop we already have the highest property taxes not only in Europe, but the World.

“The Chancellor must be bold within his upcoming Budget next month through an unprecedented stimulus of freezing rate rises in April 2018.”

A spokesman for the Department for Communities and Local Government said: “Following the recent revaluation, the majority of businesses will see a fall in their rates from this year.

“In addition (in) the spring Budget the Chancellor announced a £435 million package of rate relief that is now being rolled out across the country.”

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