Borough tops count of firms hauled before courts over business tax ‘burden’

Tower Hamlets Council spent �27,000 on cars, according to the TaxPayers' Alliance. Picture: Mike Bro

Tower Hamlets Council spent �27,000 on cars, according to the TaxPayers' Alliance. Picture: Mike Brooke - Credit: Mike Brooke

Almost 3,000 businesses in the borough were taken to court for failing to pay business rates – the highest in the capital, figures reveal.

An investigation by real estate advisor Altus Group showed that Tower Hamlets Council in the last financial year hauled 2,876 firms before magistrates to recover the tax.

The figures – gained through a freedom of information request sent to all London councils and replied to by 25 – compare to second place Islington (2,631), third place Hackney (2,282) and Sutton’s low of 403.

National government works out business rates based on a property’s ‘rateable value’ meaning its rental value on the open market. They are updated every five years.

Altus Group’s Robert Hayton said the findings went beyond simple tax avoidance.

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“London was the hardest hit of any region under last year’s revaluation. It is therefore unsurprising that the level of summons being issued by councils in London was far higher than the average for England.”

In Tower Hamlets there were 13,664 properties liable to pay between April 2017 and March 2018 with a fifth taken to court, according to Altus Group.

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The numbers led the advisor to claim new business rates – re-calculated last year – were criminalising firms struggling to cope with an ever increasing tax burden.

A council spokesman said: “We have one of the largest numbers of ratepayers in London and the vast majority pay in full and on time.”

He added that the councils listed in Altus Group’s report called to court on average 17.31pc of businesses who failed to pay.

The council summonsed 2,876 businesses out of 16,220 last year meaning they were only just slightly above average at 17.73pc, the spokesman confirmed.

It has seen a rise in recent years in the number of organisations required to pay, but the spokesman said that at the same time court actions have dropped.

“The council is well aware of the challenges some ratepayers face and so where court action is taken, we often make extended payment arrangements and ensure all possible payment reliefs are awarded to minimise the burden,” he said. The council said it has limited enforcement with 1,205 cases in 2013/14 falling to 469 last year.

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