Business Rates an Overview
As another financial year comes to an end the council business rates departments across the UK will be starting their annual cycle of sending out their rates bills. If you are a recipient of such a bill and are not in agreement with it or are struggling to pay it, then you may have an interest in gaining further understanding of this subject and why it matters.
Business rates can often be overlooked especially when starting a business, you will probably need to communicate regularly with your council initially, to establish the basics and ensure the information and dates held by the council are correct. Communication via the email system is often more convenient for all and this method offers a record of details exchanged, in case there is any confusion when the bill is issued.
There can be historical aspects relating to previous renters in terms of outstanding business rates. The previous renter who has often moved on may not have kept the council up to date, this can lead to confusion and is not the landlord’s responsibility. The landlord is only responsible for dates the premises have been empty or used by them. The person whose name is on the lease is ultimately responsible for any business rates due on the premises occupied by the business, unless the business is a limited company.
You may need all communication and lease documentation for dates in order to ensure the rates bill is correct and reflects the business premises and uses etc. The amount due should be the amount expected as it is based on relevant and accurate information supplied to the council via the business concerned.
Each council tends to have differing response times to emails so patience may be required on occasions. If the year passes and data on the business held by the council is wrong once the bill is issued things can become more complicated. It is often the case that different councils have different payment plans available, some may offer a three month plan others a ten month plan and some may offer no plan at all.
If no plan is offered by the council and no payment made on behalf of the business, then often the council may employ a private bailiff company to recover the money. At this point the council may decide not to acknowledge or communicate with the business concerned and refer them to the bailiff company they have chosen.
The payment plan is an agreement between the business and the council, if broken then the council may again direct a bailiff company to recover the debt. There are rules, regulations and guidelines to ensure the bailiff company working on the councils behalf operates reasonably and professionally. Many bailiff companies’ offer their own payment plans to help with payment but there will often be associated costs once a bailiff is involved.
Payment plans can help reduce the pressure on cash flow and help the company weather a short downturn. They are a lifeline at times to ensuring a business keeps trading especially in the first few years. It is in the council’s interest to keep as many businesses as possible operating as the benefits of a busy high street are obvious to all.
There are rate relief’s available and reduced rates for storage and other uses which all businesses should be aware of and make use of. Sub-letting unused parts of the building helps reduce the overall costs, however this can introduce extra administration costs and responsibilities. Some businesses where possible have split into smaller companies to acquire rates relief for each company but this can multiply the administration costs.
10 Steps to help manage your business rates.
Communicate with the council via the email system.
Ensure dates and facts held by the council are up to date and correct.
If renting new premises ensure you are not charged for someone else’s business rates.
Who is responsible the business rates debt private company or limited company?
Keep lease documents and all other business rates related documents.
Enquire about council polices relating to response times and payment plans.
Obtain a payment plan before bailiffs are involved.
Ask your council about rate reliefs available and reduced rates for storage.
Sub-letting may be an option to be investigated.
Can the business be split into smaller entities to qualify for rates relief?
It’s about getting ahead of the game and ensuring the bill issued is for the correct amount and issued to the correct person. The responsibility falls on the business owner who has signed the lease to check what the council’s specific policies are and how it may affect them in the future.
All councils have to finance services and have obligations to the local community. They like all institutions will try to recover outstanding money owed to them. It pays to keep a cool head and remain professional and patient when dealing with councils or bailiffs; if you reason with either party they can and will often help in assisting and relieving the situation.