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Business Rates – Recovery Process for Non Payment

1. What happens if I don’t pay my Business Rates?

Business Rates are payable in 10 monthly instalments due on the 1st of each month and payments should be on your account by that date.

By Law, the Council must send a Reminder notice if your instalments are not up to date. If you do not bring them up to date within 7 days and then keep them up to date in future, you will lose the right to pay by instalments and the full amount for the year will become due and
payable immediately.

If you fail to comply with the Reminder notice and pay the amount as requested, you will be sent a Summons to appear in the Magistrates Court for non payment and this will include additional Court cost fees, in addition to the Business Rates you owe.

If you receive a Summons and do not pay the full amount, including Court costs before the Court hearing, the Council will apply for a Liability Order to be issued, which gives the Council further powers to recover the debt outstanding.

The Council can employ Bailiffs to obtain payment, commence Bankruptcy or Liquidation proceedings against you or your company or consider making an application to the Magistrates for your committal to Prison for Non Payment.

2. What if I can’t pay the amount on the Reminder or Summons?

If you are experiencing financial difficulties and cannot afford to pay your Business Rate bill, you should contact the office immediately so that we can offer you help and advice. We will try and make a suitable payment arrangement with you after considering your circumstances.

If you do not contact us and continue to miss making payments, then legal action will be started in the Magistrates Court to recover any amounts outstanding. This will result in additional Court Costs being added to your account.

3. If I have made a payment arrangement with the Council, why do I still have to pay the Court Costs?

By law, the costs are payable once a Summons has been issued , the only way to stop the Council from applying for a Liability Order, is to pay the full amount owed before the Court hearing.

Even, when a payment arrangement has been made, the Council will still obtain a Liability Order, but will not take any further action providing the arrangement is kept.

4. What happens if the Liability Order is passed to the Bailiff to collect?

If you receive a letter warning of Bailiff action, you should either pay the full balance immediately or contact the Business Rates team. At this stage it may still be possible to make a payment arrangement with you before the case is sent to the Bailiff.

If you fail to contact us then the Liability Order will be sent to the bailiff and you will be liable for any additional costs that arise from the bailiff’s actions.

Once your case has been sent to the bailiff all payments and any queries must be made directly to them. They may be willing to make a short term payment arrangement with you, if you contact them immediately.

If you fail to pay the outstanding monies due, the Council can authorise the bailiff to levy distress on your goods and remove these items from your property. The goods would be sold at public auction and the proceeds offset against the debt outstanding and bailiffs costs due.

5. What happens if the Bailiff is unable to collect the amount due?

There are various options the Council may consider which are:

a) Commence Insolvency proceedings – this action would both seek to wind up your company and put it into liquidation or make you bankrupt if you are a Sole trader.

b) Commence committal proceedings in the Magistrates Court for non payment which may result in a term of imprisonment being granted by the Magistrate’s.

Further information regarding bankruptcy can be found by clicking on the following link: www.insolvency.gov.uk.

You can also obtain independent debt advice from the Citizens Advice Bureau at either:
www.lancastercab.org or http://www.citizensadvice.org.uk/morecambecab

6. How will I know if the Council are going to make me Bankrupt?

The Council will issue you with a warning letter and some guidance notes for information, giving you the opportunity to pay before the next stage of the Bankruptcy process.

A Statutory Demand notice will be issued to you advising you of the amounts outstanding and giving you a further 21 days in which to make full payment.

If no payment is received within 21 days of the Statutory Demand being served, then the Council will take the case to the County Court and submit a petition for bankruptcy or seek a winding up order in respect of a company.

The outcome of this action may lead to you being declared bankrupt and your property and goods taken away from you.

If you require a short period of time to arrange finances to clear the debt outstanding at this stage, then debt recovery officers are prepared to work with you providing you make immediate contact. It would be on the understanding that you could provide proof that the funds would be readily available and paid over quickly.

7. What are the implications of being made Bankrupt?

The Official Receiver who is the person appointed to administer the Insolvency, has powers to investigate your financial affairs, freeze bank accounts and oversee the sale of all assets. If you are a Sole trader this may include the sale of your home and any other property you own and your business would close.

The cost involved of taking bankruptcy proceedings can be considerable and settlement at the bankruptcy hearing stage may result in costs of over £1,000 payable by you.

You will no longer have control over your assets , you may be faced with a number of credit restrictions and the bankruptcy will stay on your file for at least 6 years.

8. What happens if I receive a summons for a Committal to Prison hearing?

If all other methods of trying to recover the money you owe in respect of Business Rates have been unsuccessful, then the Council may consider issuing a summons and make an application to the Magistrates for your committal to prison for non payment.

Once you receive a Committal summons you are required to either pay the total amount due in full or attend the Magistrates Court hearing to explain why the Business rates have not been paid in accordance with the demand notices issued.

9. What will happen at the Committal Hearing?

The Magistrates will conduct an enquiry into your means at the time the amount became due. You will be required to provide your full income and expenditure details and explain how that income was spent. If the Court find you guilty of wilful refusal or culpable neglect, then they have powers to commit you to prison for a period of up to 90 days for each Liability Order outstanding.