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What are my options if I cannot afford business rates?

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We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

What are my options if I cannot afford business rates?

Reviewed: 5th June 2015

Paying business rates is a legal obligation and by law, the council must do what it can to collect the money.  If you can’t afford to pay your rates this month, it’s important you contact the council as soon as possible to see if they can help.  You may be able to arrange a payment plan with them.  It’s also worth checking that you’re getting any relief that you may be entitled to as this could reduce the amount you have to pay.  Business rates are usually payable in 10 monthly instalments throughout the year.  If you’re late with your payments, the council will first send a reminder letter giving you seven days to pay the arrears.  If you don’t pay what you owe them within this time then you may lose the right to pay in instalments and the council can demand that you pay the full amount immediately. 

If you don’t pay after the reminder letter, then you’ll be sent a summons informing you that the council intend to apply for a liability order.  Unfortunately, any court fees, including the cost of issuing the summons, will be added on to the amount you already owe the council.  If you still haven’t paid before the hearing date, then the council will apply for a liability order to be issued which will give the council more power to collect the outstanding debt through other methods.  This usually means instructing a bailiff to collect the money you owe.  Unfortunately, the bailiff’s fees will also be added to your debt.  If the bailiff is unable to collect the money, then the council may even start insolvency proceedings which would involve winding-up and liquidating your business if it’s a limited company, or making you bankrupt if you’re a sole trader. 

If you don’t feel that you’re able to keep up with a payment plan, then you’ll need to think seriously about whether your business has a future.  If you feel that you can turn the business around if you just have more time, then entering into a Company Voluntary Arrangement if you own a limited company, or an Individual Voluntary Arrangement for sole traders, may be an option.  Under these schemes, your creditors, including the council, vote on whether to accept a payment plan for a proportion of the debt that you owe, and creditors that hold at least 75% of all the company’s debt need to agree to it.  An agreement is then drawn up with all of your creditors giving you more time to pay.  Entering into a CVA allows you to carry on trading and gives you protection from further pressure from your creditors, providing you keep up with the payments.  An insolvency practitioner will be able to advise you on your full range of options.

Whatever course of action you take, it is important to seek professional advice quickly, as the longer you leave it, the bigger the debt will become and the more serious the consequences can be.

Our extensive office network comprises 55 offices across the UK with a partner-led service offering immediate director advice.


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