What if I can’t afford to pay my business rates?
If you can’t afford to pay your business rates, the council responsible can take action to recover the amount that your business owes. If you can’t afford to pay your business rates, there are options available to deal with this type of insolvency.
What happens if I can’t pay my business rates?
Any business which owns or rents all or part of a property used for any non-domestic purpose legally has to pay business rates for that property. The amount you have to pay depends entirely on the rateable value of the property, determined by the property’s annual market value.
Councils across England and Wales take a similar approach when dealing with businesses that don’t pay their business rates. They are likely to:
- Send you a reminder letter – If you are late in paying your business rates, your local council will send you a reminder letter, which will give you seven days to pay. If you don’t pay within this time, then the council may ask for the full amount immediately.
- Issue a Summons – The summons will inform you that the council intends to apply for a liability order, and there will be a court hearing. Any court fees accumulated for the cost of issuing the summons will be added to the amount already outstanding.
- Apply for a Liability Order – If you do not pay your debt before the hearing date, the council can apply for a liability order, giving them more powers to collect the money you owe.
- Instruct a debt collector or a High Court Enforcement Officer (bailiff) – The council can instruct a debt collector or a High Court Enforcement Officer to collect the debt on the council’s behalf, with their fees added to the debt owed. If they cannot collect the debt, the council may look to wind up your company or make you bankrupt if you are a sole trader.
More information about bailiffs and their powers
What are my options available if I can’t afford to pay my business rates?
Taking action before you reach the point where you can’t afford to pay your business rates is paramount. There are several options available to you if you become aware that you can’t afford to pay your business rates.
These could include:
- Arranging a payment plan with the council
Speak with your local council and explain your situation to them. You may be able to arrange a payment plan that offers longer repayment terms and smaller repayment amounts, helping you spread the cost of payments. - Applying for business rates relief
You may be able to apply for business rates relief from your local council, which will help reduce your business rates bill. You may automatically be given business rates relief, but you may also need to apply.
What formal insolvency solutions are available?
If you can’t afford to pay your business rates and the above solutions are not suitable, speak to a licensed insolvency practitioner. Whether you have failed a payment plan, received a summons or had to deal with bailiffs, we can analyse the business’ situation and help propose a way forward. Our insolvency practitioners can give actionable advice on how to move forward.
Your business’ situation will dictate which of the following solutions are best for it going forward:
- Repay through a formal repayment arrangement
Company Voluntary Arrangements (CVAs) allow companies to repay their unsecured debts in instalments tailored to what the company can afford on a monthly basis. CVAs typically last five years, pausing creditor pressure and allowing the company to continue trading for the arrangement’s duration. Once the arrangement concludes, any remaining unsecured debt is written off.
More on Company Voluntary Arrangements - Restructure a company through administration
If a company requires more substantial restructuring action, directors can explore administration. During this process, we can act as the administrator while trying to return the company to a profitable state and make it more appealing to potential buyers. Administration is a temporary state wherein the company is protected from creditor pressure and legal action and is often followed by other insolvency processes.
More on Administration - Closing the company through liquidation
If a business is insolvent and can’t recover, a director can choose to voluntarily close the company by placing it into Creditors Voluntary Liquidation (CVL). During this process, assets are realised and distributed amongst outstanding creditors. Any outstanding unsecured liabilities are discharged in the liquidation, and the company ceases to exist, allowing its directors to start afresh.
More on Creditors Voluntary Liquidation
How we can help
Unaffordable business rates could indicate that your company is financially unstable. Speak to us if you can’t afford to pay your business rates. Our advisers can assess your company’s situation and explain the options available. Depending on your circumstances and how you’d like to proceed, we can explain alternative solutions, and provide free, actionable guidance and advice.
- Speak with our initial advisers via phone or online chat. If we can help, we will arrange a free consultation with one of our consultants to discuss your situation in more depth.
- During the consultation, we will advise which solution is the most appropriate route forward for your business.
- After your consultation, if there is an appropriate route forward, we will issue the relevant documentation for you to formally engage us.
In summary
Business rates are a legal obligation for any property owned or rented for anything other than domestic purposes. If you occupy a property to run your business, you need to pay business rates. If you can’t afford to pay your business rates, you can deal with it in several ways if you act quickly enough.
You might be able to contact the council to arrange a payment plan or apply for business relief. Otherwise, contact a licensed insolvency practitioner to assess the business’ circumstances and implement a rescue plan or close the company down. Failing to take action means the council can act to reclaim the debt themselves using bailiffs.
Case Studies
Statestrong Limited
Kelly Burton • Manufacturing • Administration, Creditors Voluntary Liquidation (CVL)
Insolvency experts Wilson Field has helped turnaround the fortunes of a loss-making manufacturing company in Lancashire providing a new future for its 80 employees.
Businessman Russell Blaikie acquired the struggling 40-year-old Statestrong Limited, headquartered in Lytham St Annes, through a pre-pack sale and has been able to help the company immediately utilising his expertise in manufacturing and management.
Arrangements for the purchase of Statestrong’s business and assets were negotiated by Sheffield business specialists Wilson Field who affected the sale shortly after being appointed.
The company, which manufactures and supplies aerosol and liquid products for use in health and beauty, household, automotive and industry globally, posted sales of £12m last financial year, but had suffered pressure from creditors with outstanding arrears.
The total value of the deal is undisclosed but includes the business and the assets of the company based on Boundary Road in Lytham St Annes and Tarporley in Cheshire, which will now trade as Statestrong Products Limited.
Mr Blaikie said:
“Transactions of this nature are sensitive and require careful handling. The team at Wilson Field provided exactly the right professional approach.”
Wilson Field’s insolvency practitioners Kelly Burton and Joanne Wright worked closely with Mr Blaikie along with senior corporate case administrator Gareth Kinneavy.
Kelly Burton, said:
“The company had a wealth of expertise but was straddled with financial liabilities which ultimately made its future questionable. Looking forward, a previously distressed business now has a viable future.”
Designer Recliners Limited
Kelly Burton • Manufacturing • Administration, Company Voluntary Arrangement (CVA)
A Sheffield furniture manufacturer and upholster has relaunched offering a smaller, more specialised range of products.
Anico Interiors Limited, which included reclining chairs for the elderly, had suffered cash flow problems and issues with profitability.
Designer Recliners Limited, managed by director Nick Wall, has purchased the assets and business of Anico saving all 11 jobs.
Andy Wood and Robert Dymond from Sheffield business turnaround experts Wilson Field were appointed joint liquidators on 8 June and advised on the sale of the 14-year-old company, based on Orgreave Crescent at Orgreave Industrial Estate, as a going concern.
Andy Wood, associate director and insolvency practitioner at Wilson Field said:
“Historically, the company offered a wide range of products but has now streamlined its offer to customers and cut out some unprofitable lines, as well as re-vamped its web site.
“Directors took advice from Wilson Field with the business sold to new company Designer Recliners Limited as a going concern, safeguarding all 11 employees’ jobs. The new company will offer the same service and standards under the same management team but focus on a smaller range of specialised products.”
The company employs skilled staff including upholsterers, seamstresses and cutters and was set up in 2002 by Nick Wall.
Silcox Coach Company
Kelly Burton • Automotive • Company Voluntary Arrangement (CVA)
Pembrokeshire-based Silcox Coach Company, which operates school transport as well as local bus services, has been placed into administration today.
Despite attempts by administrators from Sheffield-based Wilson Field to secure a buyer with various interested parties, the 134-year-old company, which operated a fleet of 65 coaches and buses from its base in Pembroke Dock, has now ceased trading.
Insolvency practitioners Kelly Burton and Joanne Wright from Wilson Field Limited were appointed by shareholders after the company experienced financial difficulties and as a result all 92 staff jobs have been made redundant.
However, in the region of 50 staff have been re-employed by Edwards Coaches of Pontypridd who have been granted the local authority contracts previously operated by Silcox.
Kelly Burton, director and insolvency practitioner at Wilson Field said:
“Silcox Coaches was a fourth generation bus and coach operator and over the years provided various forms of transport services latterly focussing local authority community bus routes, school services, coach hire and coaching holidays.
“The company had an excellent reputation within the industry, the local community and its clients. Initially there were a number of parties interested in buying the business and assets and we had hoped to save all the jobs of the loyal workforce. Sadly, despite our best efforts none of these came to fruition. On the positive side, Edwards Coaches of Pontypridd have re-employed approximately 50 of those staff.”
As well as office accommodation in Pembroke Dock, Silcox also occupied a small travel office in Tenby and a large bus and coach compound near the offices in Pembroke Dock.
Edwards Coaches is the largest family owned coach company in Wales employing over 500 staff and operating 260 vehicles. It currently operates National Express coaches from Haverfordwest departing daily to Cardiff, Heathrow, Gatwick London and various other destinations plus transportation for over 8000 students to school or college each day from bus depots all over South Wales.
It also operates coach holidays for 80,000 passengers a year across the UK and Europe and operates The Edwards’ Red Dragon coach which is the official carrier of the Wales Rugby Team.
Travellers who have booked and pre-paid for a holiday with Silcox may be entitled to a refund and should contact either Bonded Coach Holidays (BCH) e-mail: bch@cpt-uk.org or The Confederation of Passenger Holidays UK (CPT) Tel: 020 7240 3131.
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