Councillors in Wyre Forest are backing a national campaign to prevent companies using sharp legal practices to avoid paying business rates.
The council has written to the Government calling for a change of law to help strengthen their powers to collect unpaid debts.
Each year Wyre Forest District Council collects around £30million in business rates from firms in the district which then goes into a “pool” to be re-distributed to Central Government and local councils. Last year the council successfully collected 97.86% of all business rates due in the district.
The council has robust processes in place to collect business rates and will fully explore all avenues to recover unpaid debts, ultimately taking businesses to court.
However there is a small minority of cases which exploit current regulations surrounding National Non-Domestic Rates contained in the Local Government Finance Act 1988 to escape paying their dues.
The council has written to the Ministry of Housing, Communities and Local Government asking for the law to be reviewed following a case in which a company called Worldmile Services Ltd avoided paying rates of more than £98,000 for their registered property in Worcester Street, Kidderminster leased from the owners Tavistock Estates Ltd.
The case will be discussed by Cabinet on Tuesday 13 November when members will be asked to formally write off the debt after all avenues to recover the money were exhausted. The case ended in court, which ruled that although the company registered with Companies House, the contrived circumstances of the company meant recovery of the debt was impossible.
Cabinet Member for Resources Nathan Desmond said: “We have a very robust process in place to collect business rates and will always explore every avenue open to us to recover debts.
“We were very disappointed the courts did not rule in our favour in the latest case. We firmly believe that it is not acceptable that companies use sharp practices to avoid paying business rates which they have a duty to pay.
“That is why we have made representation to government asking for changes to legislation as current court rulings are resulting in a significant loss of income to local government.
“We will continue to be proactive and lobby for legislative change. The need for change is more pressing with local government funding reforms in 2020, that will make the county council and district councils even more dependent on stable business rates income.”