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I can’t afford to pay my business rates

Any business which owns or rents all or part of a property used for any non-domestic purpose is legally obliged to pay business rates for that property. The amount you have to pay depends entirely on the rateable value of the property, which is determined by the annual market value of the property which you own or rent.

You may be in a position where you are unable to pay your business rates. If this is the case, there are options available to you.

What happens if I do not pay my business rates?

Councils across England and Wales take a similar approach when dealing with businesses who have not paid their business rates. They are likely to:

  1. Send you a reminder letter – If you are late with your payments, your local council will send you a reminder letter which will give you seven days to pay the arrears. If you don’t pay in this time, then you may lose your right to pay your business rates in instalments, and they are likely to ask for the full amount immediately.
  2. 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.
  3. Apply for a Liability Order – If you do not pay your debt before the hearing date, then the council can apply for a liability order which gives the council more powers to collect the money you owe.
  4. Instruct a Debt Enforcement Agent (bailiff) – A bailiff will be instructed to collect the debt on the council’s behalf, and their fees will be added onto the debt you owe. If the bailiff is unable to collect the debt, then the council may look to wind-up your company or make you bankrupt if you are a sole trader.

More information about bailiffs
if you can't afford to pay your business rates, you do have options

What are the options available if I cannot afford to pay my business rates?

Taking action before things escalate is paramount. There are several options available to you if you become aware that you can’t afford to pay your business rates. These include:

  • Arranging a payment plan – Get in contact with your local council and explain your situation to them. You may be able to arrange a payment plan which can help you spread the cost of payments by offering longer repayment terms and smaller repayment amounts.
  • Applying for business rates relief – You may be able to apply for business rates relief from your local council, which will help you to reduce your business rates bill. You may automatically be given business rates relief, but you may also need to apply.
  • Seeking advice from a licensed insolvency practitioner – If you are struggling to pay your business rates, especially if other liabilities are building up too, then contact us. Whether you have failed a payment plan, received a summons or had to deal with bailiffs, we can look at the business as a whole and make a plan for its future. Our insolvency practitioners can give actionable advice on how to move forward.

How can an insolvency practitioner help me?

If you cannot keep up with your payments or you are struggling with debt, get in touch with us as soon as possible. We can help you to turn around your business by looking into rescue options. One such example is a Company Voluntary Arrangement (CVA), which will combine all your debts into one affordable monthly payment.

Similar voluntary arrangements are available to sole traders and partnerships. This is paid over five years, with any remaining debt written off upon completion of the arrangement. When turnaround isn’t desired or appropriate, then company closure options such as Creditors Voluntary Liquidation (CVL) can be explored.

More on the duties of an insolvency practitioner

In summary

Business rates are a legal obligation for any property owned or rented for anything other than domestic purposes. Thus, if you occupy a property in order to run your business, you will need to pay business rates. Any issues with keeping up with these payments can be dealt with in a number of ways if you act quickly enough. On some occasions, it might be as simple as contacting the council to arrange a payment plan or apply for business relief. Otherwise, it might be a matter of contacting a licensed insolvency practitioner like ourselves to assess the business and implement a rescue plan or if you prefer, close the company down. Failing action being taken, the council can act to reclaim the debt themselves using bailiffs.

How we can help

Unaffordable business rates could indicate that your company is financially unstable. However, we can help. Our advisors can assess your company’s situation and talk you through the options available. Depending on your circumstances and your vision for the future of the business, we can explain alternative solutions, along with free, actionable guidance and advice.

Insolvency solutions

If your business is experiencing cash flow issues or suffering from debts to the point where it cannot afford its business rates, it may be a sign of more significant internal trouble. Fortunately, we offer a range of insolvency solutions to suit whatever circumstances your business may be in.

Help for limited companies

If a company’s core business structure is viable, with the potential of being profitable without its debts, we offer several company recovery arrangements. Formal agreements, such as a Company Voluntary Arrangement allow you to continue trading while repaying your liabilities. If the business needs more restructuring, you could explore administration, where an administrator will take control of the company and concentrate on preserving the profitable elements. If your debts are all to HMRC, specialist Time to Pay Arrangements (TTP) allow you to pay off your tax bills in monthly instalments.

More information about company recovery

If the company’s debt has reached such a level that the chances of recovery are too slim to allow trading to continue, you may be better off closing the company through a Creditors Voluntary Liquidation before creditors petition to wind-up the business through compulsory liquidation.

More information about company closure

Help for sole traders

As a sole trader, you don’t have the benefit of the same limited liability as limited companies, so your personal finances could be affected by your business debt. Fortunately, we offer an arrangement similar to a CVA: Individual Voluntary Arrangements (IVA) are tailored for individuals and sole traders. IVAs allow you to pay back your creditors in monthly instalments depending on how much you can afford.

More information on sole trader debt solutions

Beverley Horton Christopher Callaghan Stephen Hall

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