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England and Wales > Debt Advice > Priority Debts > Business Rates

Business Rates

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Business rates (137KB)

The amount of business rates (sometimes referred to as non-domestic rates) payable for business premises is based on the valuation carried out by the district valuer.

Appeals against the rateable value should be made within six months of occupation of the business premises, or if changes are made to the building.

It is advisable to obtain professional advice from a specialist in this field if an appeal is contemplated – phone your council’s valuation office for a list of reputable firms in your area and be very careful when dealing with firms who approach you first.

You should not stop paying business rates just because you feel that the valuation is wrong. You are obliged to pay at the fixed rate until the valuation is changed.

Reliefs. It may be possible for your business to reduce the amount payable for business rates via a range of different reliefs.

These include the small business rate relief effective from 1 April 2005. You should apply to your local authority.

You may even be able to ask the local authority to grant up to 100% relief if you can demonstrate that you would suffer severe hardship and that it is in the interests of other ratepayers for them to do so.

This would usually be if you supply an important service to the local community and only in extreme circumstances.

For the range of different reliefs available see the official government website, www.mybusinessrates.gov.uk

Ifyou cease trading, but are still liable for the lease, youmay still be liable for business rates.

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What Happens If I Don’t Pay My Business Rates?

The local authority will usually tell you to pay your bill in ten monthly instalments or they may accept weekly payments.

If you find at any time that you can’t pay the full monthly instalment don’t just stop paying!

Keep paying what you can afford.
Contact the council and try to come to an arrangement. Use your business and household budget to help explain your situation.

Liability Order

If you miss an installment for business rates you will be served with a reminder notice asking for the installment to be paid in 7 days. If after a further 7 days you have still not paid or made an arrangement, the entire balance will become due and the local authority will ask the magistrates’ court for a liability order for the full amount they say you owe plus court costs. The liability order says that you are due to pay your business rates and have not paid.

The court must issue the liability order unless:

the council has not gone through the proper procedures;
you have paid the amount owed;
the amount has been incorrectly calculated;
the name on the summons is wrong.

If one of these applies to you, tell the council immediately and attend any court hearing.

Such matters as appeals against valuations, exemption from rates, or financial hardship are not a valid defence against the issue of a liability order.

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Methods of Enforcement

If you do not make an agreement with your local authority or don’t keep up the agreed payments, there are a number of ways in which they can try and make you pay.

In cases of exceptional hardship the local authority has the power to write off the debt. They will only do this very rarely. Phone us for advice.

Distraint for Non-payment of Business Rates

The local authority can ask bailiffs to visit your business premises and take goods, which may be sold to pay off your debt. If you are a sole trader or in a partnership then baliffs can also visit your home.

You have the right to refuse entry to your home and business. The bailiffs cannot force their way into your home or business to collect unpaid business rates. It may be practically impossible however to stop them entering your business if it is open to the public. If you have let them in to your home or business before, the baliffs may have the right to force entry when they return. You should not sign any papers the bailiffs may post through your door, otherwise you may be charged extra costs and the bailiffs may try to enter by force.

The bailiffs must carry written authorisation from the local authority and are not allowed to take certain basic household goods.

They should not take clothing, bedding, furniture, household equipment and provisions necessary for satisfying the basic domestic needs of your family. But the bailiffs can take anything else you own (or jointly own). This may include tools of the trade, business stock and cash registers.

The bailiffs do not normally take goods on their first visit. They will usually list items that will be collected a few days later. This is known as a ‘walking possession order’, which you will be asked to sign. The bailiffs can then re-enter by force, if necessary, to remove goods subject to the walking possession order.

The bailiffs should only list sufficient items that, when sold at auction, will pay off the amount of the court order and their own charges (which are set out in regulations). But remember, the resale value of second-hand goods will not be nearly as high as when you bought them in the first place.

The baliffs should only take goods owned by you (or jointly with you). They cannot take goods owned by someone else including those that are rented or on hire purchase. Be ready to prove this (if this is the case) by providing them with finance agreements and receipts etc.

Contact the local authority and the bailiffs and try to make an arrangement to pay. You should do this as soon as possible because you will be charged costs for each time the bailiffs visit your home.

Use your business and household budget (recorded in your budget sheet) to support your offer and start paying what you can afford, no matter how little, immediately whether they agree to your offer or not.

If the bailiffs will not accept your offer of payment then ask the local authority to take the account back from the bailiffs to let you pay the local authority directly.

If the bailiffs try to break in or they threaten you, phone us for advice.

If the bailiffs are unable to recover sufficient goods to cover the debt, then they will usually refer the matter back to the local authority which will then consider other methods of enforcement.

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Insolvency

Where a liability order has been obtained, the local authority can commence bankruptcy (sole trader/partnership) or company winding-up proceedings if the debt is £750 or more. If this is threatened, phone us for advice.

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Imprisonment

If the local authority has tried to use bailiffs, and your business rates have still not been paid in full, they may apply to the magistrates’ court for an order for you to be sent to prison (known as ‘committal’).

The court is unlikely to send you to prison if you have not paid because you don’t have enough money. The court would have to show either:

you have deliberately refused to pay (known as ‘wilful refusal’); or
you could afford to pay but did not (known as ‘culpable neglect’).

You must attend the hearing and show the court your business and household budget to explain why you have not been able to pay.

Take along any evidence to show you have tried to pay what you could afford.

It is very important to get advice before the hearing. There may be a local advice agency that can help you, or phone us for advice. If you have not been able to get help before the hearing you can ask for help from the duty solicitor in the court on the day of the hearing.

In very exceptional circumstances the court may order your business rates or Council Tax arrears to be written off. You should ask for this if you cannot afford to pay, have lots of other debts, and are in severe hardship.

Otherwise, the court is likely to suspend committal on terms that you pay an amount each month or week until the debt is paid. If you do not pay this amount as specified you will have to go to court again and may be sent to prison for up to three months.

Once the full term has been served the debt becomes irrecoverable. The issue of a committal order, whether suspended or not, makes the debt unenforceable by any other method.

If you find you can’t pay what the court has ordered, keep paying what you can afford and apply to the court to reduce the amount you have to pay. Phone us for further advice.

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