Property consultancy Colliers note rise in legal actions against businesses struggling to pay rate bills, as over 183,000 businesses ask for a reassessment of their rates due to the pandemic
A number of local authorities are starting to turn the heat up on businesses that have not paid their business rates bills during the period of the Covid-19 pandemic and Lockdown- and are applying for enforcement actions via the courts.
According to business rates experts at property consultancy Colliers , an increasing number of their clients are receiving letters demanding payment and/or a court summons.
John Webber, head of business rates at Colliers said: ‘It is ironic that the government is preventing private landlords from taking recovery action against tenants not paying rent while at the same time turning a blind eye to Billing Authorities acting on recovery action as if Covid-19 didn’t exist!’
The impact on many businesses has been dramatic, with many suffering a high financial disruption throughout the period. This is shown by the number of companies that have begun to appeal their business rates assessments on the grounds of an MCC (Material Change of Circumstance) to their business operations as a result of Covid-19 and Lockdown.
Latest CCA (appeals) figures announced last week show that over 183,000 businesses made a Check and so began the appeal process in the 6 months period April 1 to September 30, 2020, averaging according to Colliers over 1000 appeals per day- an unprecedented number, and putting Colliers on a ‘wartime footing’, according to Webber.
Unlike those in the retail and leisure sectors, office occupiers were not granted a business rates holiday during Lockdown, despite the government announcing on March 20 that staff in office-based businesses should not assemble together, nor to travel on public transport unless they were essential workers- but should work from home- effectively ‘prohibiting the use’ of such offices- leading to many business owners leaving their offices and work locations empty.
And as the initial Lockdown started to lift, many offices remained empty or only became partly occupied, particularly as the government insisted on social distancing rules, limiting numbers and discouraging workers from using public transport. Now as we experience a second Lockdown, even these offices have been emptying again.
Webber added: ‘We appealed to the government to introduce a business rates holiday for the period of Lockdown and to introduce some reliefs for the disruption to businesses seen since. As we endure a second period of Lockdown, this is more important than ever.
‘In the meantime, we have been negotiating on our client’s behalf with local billing authorities requesting them to show leniency to businesses that are struggling to pay their bills. We are finding that attitudes vary greatly depending on where businesses are based and the attitudes of the individual billing authority.
‘There is a total lack of consistency- some clients for example with properties across boundaries find they are granted reliefs for some of their properties by certain local billing authorities but not from others.
‘And recently there has certainly been a step up of enforcement activity via the Courts. It’s ironic that while many businesses have been forced to “empty “their offices for a second Lockdown, the courts are being kept open in this period to deal with the backlog of cases.
‘As a result, we believe we’ll see more court summonses and enforcements as we go forward.’
Colliers cites the following examples of enforcement activity it is seeing in some parts of the country:
- One local authority in Hampshire issued final notices to businesses in June while the country was still in lockdown and did not offer Colliers the chance to re-calculate its client’s instalments and ‘didn’t see’ the email sent requesting they do so.
This local authority is currently saying that the client can either reinstate instalments by making a catch-up payment with costs included or just pay the year’s liability upfront - but those are the only ways in which they will remove the summons.
‘It is outrageous that not enough is being done to help thousands of businesses who, due to a government led policy, are struggling to pay their rate bills and keep afloat, during this difficult time’, said Webber.
He added: ‘Instead of receiving help, many are receiving threats of court summonses and it’s a postcode lottery as to where this is occurring.’
‘We urge the government to offer reliefs for the lockdown periods and to instruct Local Billing Authorities to show flexibility and support to business rather than stepping up the heavy-handed court summons.’