Redundancies threat after port rates system shake-up

Sep 12 2008 by Bill Gleeson, Liverpool Daily Post

A HUGE hike in business rates at ports is threatening to put firms out of business and cause hundreds of redundancies in Merseyside.

In a shake-up of how rates are set and collected in ports, tenants in all the region’s docks will receive back-dated tax bills at the beginning of October.

But an industry analyst warned last night tax collectors will be “issuing rate notices for companies that will be insolvent by Christmas”.

The Government’s Valuations Office Agency (VOA), which sets the rates companies need to pay, embarked on a nationwide revaluation of the UK’s 55 ports in May, 2006. New legislation changed how business rates are to be paid in ports. Previously, the port owner would pay rates while tenants only paid rent, which contributed to the landlord’s payments.

But tenants are now being directly charged for rates based on an assessment of the profitability of their site.

And because business rates are based on five-yearly valuations – the last of which should have been conducted by April 1, 2005 – the tax bills are being back-dated three years.

While port tenants were aware the changes were imminent, the combined effect of the tax hike and having to stump up for three years’ tax at once has caught many off guard.

Philip Rees-Roberts, a solicitor who represents two dockside firms, told the Daily Post: “The Government isn’t going to get their tax. They [the companies] will reorganise through insolvency. All they’re going to do is cause a lot of trouble.

“They’ll be issuing rate notices for companies that will be insolvent by Christmas.”

“The timing’s appalling, but the impact will be significant.”

Mr Rees-Roberts says the rate bill faced by his clients range between £350,000 and £500,000.

He added: “A company with £100,000 gross profit, it makes them instantly insolvent.”

It is possible the companies could be bailed out by the port owners themselves. If many of their tenants go bust, they would have to pay the empty building rates.

A spokesperson for Peel Ports said: “This is a government ratings revaluation which affects all ports, and, like our counterparts throughout the UK, we will have no choice but to comply with the necessary regulations.”

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