Leicester City Council - What will happen if I do not pay my Business Rates?

What will happen if I do not pay my Business Rates?

If you have problems paying your Business Rates at any stage of the process shown below we will consider making an arrangement with you. We are not legally obliged to make payment arrangements, and only consider them as part of our effort to ensure that all Business Rate payers are treated fairly and objectively.

This approach to collecting Business Rates enjoys cross party political support in Leicester as we try to increase the amount we collect each year.

To see a flowchart of what happens if you do not pay your Business Rates click here.

Bills & Reminders

A bill is sent for the annual charge (1^st April – 31^st March) and you then have the right to pay by up to a maximum of ten monthly instalments. If you miss a payment we will take action to recover the money.

We will send a reminder notice for any unpaid instalment shortly after it is due. The overdue amount must be paid within seven days.

If the overdue amount is not paid, you will lose the right to pay by instalments after a further seven days. No further reminders will be sent and we will send you a Court summons that includes costs that you will need to pay in addition to the charges that are due.

If you bring your account up to date within seven days of the reminder you can still pay by monthly instalments as shown on your bill, but

Only one reminder notice will be sent in the year

If you fall behind again you will lose the right to pay by instalments and the outstanding year’s charge will become due within seven days. If the overdue amount is not paid we will send you a Court summons that includes costs that you will need to pay in addition to the outstanding charge.

The Summons & Liability Order

If you are sent a summons you will also have to pay summons costs. This is the amount the Court has agreed we can charge you for the time and cost it takes to produce and issue the summons.

We will give you at least fourteen days notice of the Court hearing date. We will take no further action if the outstanding charge and costs are paid before the hearing.

You do not have to go to the Court if you know the Business Rate charge is correct, but you have not paid it. You can go to Court if you do not agree the charge is payable for any of the following reasons:

The Business Rate charge has not been set correctly.

The property the charge is for is not in the rating list that shows all the business properties in the City. (You do have to pay if you have an appeal outstanding against the rateable value for your business that is shown in the List.)

You are not liable for the charge.

The Business Rate bill was not served correctly or did not show the correct instalments you needed to pay.

Any reminder/ further notices or the summons has not been served correctly.

The charge has been paid.

Over six years have passed since the Business Rate charge became due.

When the Magistrates agree that the unpaid charge is correct and payable they will grant a liability order against you for non-payment.

Bailiffs

If the full amount remains unpaid after the liability order is granted, we will ask a bailiff firm to collect the charge for us without any further notice. From this stage you will need to discuss any payment issues directly with the bailiffs instead of us, but the bailiff will work within a code of conduct we have agreed with them. We will only issue a pre-bailiff action warning letter if the outstanding balance in relation to any liability order granted is less than £100.

You will have to pay more costs if the bailiffs are used to collect overdue rates.

The bailiffs will try to make an arrangement with you to pay the charge outstanding, but if this cannot be done, or you do not pay as agreed the bailiffs can remove goods from your business to sell at auction to raise the funds to pay the charge. If bailiff action is unsuccessful there are further options available to us.

1. Bankruptcy

If the business is in the name of individuals rather than a company, and you owe more than £750.00, we can start bankruptcy proceedings against you under the Insolvency Act. Your home could be sold if we have to take this action.

If you are declared bankrupt you will need to send us documentary evidence to confirm the date of the bankruptcy order. The Official Receiver will appoint a Trustee who will send us a proof of debt form so we can make a claim for the amount you owe. Once any assets you possess have been evaluated, the Official Receiver will arrange to send payment to us as one of your creditors.

The Official Receiver will include any debts incurred before your bankruptcy, however if you still occupy the property you need to continue to pay any business rates that are due. If the property is empty and unoccupied and has become the responsibility of the Trustee, no business rates will be payable as the property is classed as exempt.

2. Liquidation

If your business is a company and you owe more than £750.00, we can start liquidation proceedings against you under the Insolvency Act.

If your company has gone into liquidation already, you will need to send us documentary evidence of when it happened. If there is any business rates outstanding up to the date of liquidation, we will make a claim as an unsecured creditor to the Insolvency Practitioner appointed to deal with your company. Dependent on the other creditors and the assets of the company, we may receive a payment (dividend) to help reduce what you owe.

Debts incurred before the company was liquidated will be included in our claim to the Insolvency Practitioner; however if you still occupy the property business rates will be due from the date of liquidation. If the property is empty and unoccupied and has become the responsibility of the Insolvency Practitioner, no business rates will be payable as the property is classed as exempt.

3. Administration

If your business is a company we can apply to the Court with other creditors for you to be placed in administration.

If your business has gone into receivership already, you will need to send us documentary evidence of when it happened. If there are any business rates outstanding up to the date of administration, we will make a claim to the Administrator. Depending on the circumstances, we will not take any further recovery action while the Administration Order is in place. We will ask the Administrator to pay any business rates due from the date of the Administration Order.

The administrator will look at your company’s finances and decide if, by letting the company continue to trade, its financial situation may improve, or it may be decided to sell the business as a going concern. Alternatively the administrator may recommend the only courses of action are liquidation, or a Company Voluntary Arrangement.

4. Individual or Company Voluntary Arrangement

If as an individual or as a company you go to an Insolvency Practitioner to make a voluntary arrangement, you will need to send us documentary evidence of when it happened. If there are any business rates outstanding up to the date of the arrangement, we will notify these to the Insolvency Practitioner.

The Insolvency Practitioner will write to your creditors to arrange a meeting where your debts will be confirmed, and the creditors will decide whether to accept a payment arrangement. If the arrangement is accepted we will receive payment from the Insolvency Practitioner of an agreed amount. If the arrangement is not accepted then recovery action will continue.

if you still occupy the property you need to continue to pay any business rates that are due from the date of the voluntary arrangement. If the property is empty and unoccupied and you still have the lease or freehold, 50% of the full business rate charge will continue to be payable after a three month exempt period, unless an exemption to unoccupied rate applies.

5. Receivership

If your company is placed in administrative receivership you will need to send us documentary evidence of when it happened. If there are any business rates outstanding up to the date of receivership, we will notify these to the receiver appointed to deal with your company. Dependent on the other creditors and the assets of the company, we may receive a payment (dividend) to help reduce what you owe. If the company is still trading we will ask the receiver to pay any business rates due from the date of the Receivership.

6. Charging Order

If you own the property that you have not paid business rates for, we can make an agreement with you to apply to the County Court for a charge to be put against the property for up to three years.

This acts as a security against the debt that you owe, so that if the property is to be sold during this period, your business rate debt will have to be paid to us before the sale can take place. This course of action may be an option rather than taking bankruptcy or committal proceedings against a sole trader.

7. Committal Proceedings

If you are a sole trader rather than a company, we will ask the Magistrates’ Court to summons you to appear at the Court to explain why you have still not paid the charge. If we have to do this you will be charged a further £10.00 costs.