Research by real estate adviser Altus Group revealed that, during the last financial year (2018/19), over 78,000 non-domestic properties from retailers to restaurants to pubs to factories were referred to Bailiffs to levy ‘distress’ and to seize their goods having fallen into arrears with business rates.
Bailiffs are instructed by Councils, once a Liability Order has been obtained in the Magistrates Court, to collect outstanding business rates on their behalf. Bailiffs can levy ‘distress’ and enter premises to seize goods and sell those at public auction with the proceeds taken by Councils to settle the debt.
Under the Freedom of Information Act, all Councils in England were asked to provide details of how many business premises had been referred to Bailiffs, also known as Enforcement Agents, between 1st April 2018 and 31st March 2019, with details being provided on 1,714,729 out of the 1,933,963 non-domestic properties liable for rates in England.
The responses, which cover 88.66% of all non-domestic properties, show a total of 69,367 instructions to Bailiffs were made being 4.05% of all premises with Altus Group forecasting that the overall number at 78,325.
Birmingham City Council Debt Collection Coordinators made a total of 3,755 referrals to Bailiffs last year over business rate arrears, the highest of any Council followed by Westminster and Manchester City Councils with 3,007 and 2,701 referrals respectively.
Whilst Haringey, Barking & Dagenham and Blackpool Councils all sought collection via Bailiffs on more than 15% of the business premises in their areas.
Robert Hayton, Head of UK Business Rates at Altus Group, said “if you exclude the 678,163 properties which receive 100% small business rates relief and had no bill to pay, around 1 in 16 of all non-domestic properties faced having their goods seized by Bailiffs last year”.
Last month more than 50 retailers, including Marks & Spencer, Harrods and Iceland, wrote to the Chancellor, Sajid Javid, demanding action on the business rates burden to safeguard the future of the high street.
Despite last week’s drop in the headline rate of inflation for August to the lowest level since December 2016, firms still face seeing their business rates uprated for 2020/21 next April by 1.7% if the CPI rate remains unchanged during September, which would result in a total increase of £536.03 million in England according to calculations by Altus Group with the retail sector shouldering £136.92 million of that hike.
Hayton added “it’s not the mechanics of the rating system that is of primary concern of business but the level of the actual rates bills. That’s the message we are hearing from all sectors of the economy not just retail. Commercial property is already making a significant contribution to overall UK tax revenues. With the highest property taxes across the EU, the Chancellor should recognise this in his upcoming Autumn Budget by removing the automatic inflationary increase.”