Money pit
26 Sep 2008
To pay or not to pay? The row over massive backdated business rates demands that broke out in Hull this summer is set to roll its way round the UK. Felicity Landon reports on the legal implications
As a new business rates system is rolled out around the ports of England and Wales, the stories emerging are horrendous. Some are refusing to pay the bills despite enforcement notices; others are said to be facing bankruptcy, and still more say they will have to cut staff and stop investment plans.
RMS Group, which operates in all of the Humber ports, is facing a bill of more than £3m: “It will completely cease investment – and it could be terminal,” says finance director David Johnson.
Harding Cargo Handling received a bill of £500,000, and managing director Tim Harding says: “This is completely unexpected and it will finish us. How can a small stevedoring company like mine raise this money in a week? Hundreds of companies will be in the same position as us – they will not be able to keep going.”
Under the old system, stevedoring, shipping and other port tenants have paid a rating element that was woven into their rent – paid in Hull’s case to Associated British Ports (ABP). The new system requires port tenants to pay their rates direct.
Port operators were prepared for the rating revaluation exercise and had put money aside, but could not have predicted the bills which arrived, said David Johnson – because they included a demand for payments going back to 2005.
Brian Rees adds: “We have no problems with paying rates. We were paying them under the old system. But we are now told we have to pay them again. It’s bizarre at best and scandalous at worst.”
More than 20 operators at the port have formed the Humber Dock Rating Group; they claim they are being used as a test case to see whether the UK government’s business property tax administrator, the Valuation Office Agency (VOA), can indeed push through the backdated rate claims.
They are looking at two ways forward – political pressure, which they believe will gather momentum as the rates bills arrive on desks at other ports around the UK, and a possible legal challenge.
Hull City Council, tasked with collecting the new rates on the VOA’s behalf, has taken a sympathetic view and so far not collected a penny, says council leader Carl Minns.
“We are stretching our powers but it is a bizarre situation because the VOA and government set the tax and we are just a collection agency. Eventually the VOA will come to us for the money and that is where we will have to draw the line.”
The rating group has been working with lawyer Andrew Finfer, a partner at Leeds-based law firm Schofield Sweeney. His assistant, Tom Craven, said a legal challenge to the back-dated bills was certainly possible – but hopefully a last resort, because of the time and cost involved.
Political pressure could have a faster outcome, something which could be critical for smaller companies that are literally facing bankruptcy.
If any company refuses to pay its rates to its local authority, eventually it would get a summons from the magistrate’s court; in this jurisdiction, all that matters is whether the bill was received and whether it was paid.
A legal challenge would be something for an entirely different jurisdiction and timescale – and it is perfectly possible that companies could go bankrupt before the challenge was dealt with, says Mr Craven. “So we hope that political pressure will come to bear.”
What is clear is that Hull’s predicament will spread to every port around England and Wales: “And if companies are demanded to pay rates, they will have no choice,” says Mr Craven. “If a legal challenge was successful, they would then have to try to claim it back.”





