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Business rate write off

Published: 09/05/2014

A request to write off the business rate debts for two charitable organisations that have gone into liquidation will be put to a Cabinet meeting on Tuesday (13 May). Between them, the two companies Public Safety Charitable Trust and the Life Foundation Trust owe nearly £400,000 to Flintshire County Council in business rates and any debt write off exceeding £25,000 must be approved by Cabinet. The two companies involved had leased properties all over England and Wales in a business rates avoidance scheme. As a registered charity, a company only pays 20% of the full business rates if they use the property wholly and mainly for charitable purposes and once occupied landlords are no longer responsible for paying business rates on empty properties. A Council investigation showed that the two companies were not putting the premises leased to proper use and it was decided to take legal action. A total of 121 properties had been leased between the companies in Flintshire. In taking this Court action Flintshire was one of a small number of councils in the UK who were instrumental in securing High Court rulings in favour of local authorities, who now have the right to claim back the money owed. Councillor Aaron Shotton, Leader of the Council said: “This was a national tax avoidance scheme and Flintshire was one of the lead councils that took court action to try and recover the business rates owed. The companies were made insolvent before we could enforce the rulings of the court and now the chances of recovering the money on behalf of Welsh Government are severely limited. “When a company claims the Charitable Rate Relief the properties have to be wholly used for charitable purposes, due to the action taken by Flintshire and other councils, we have been at the forefront of stamping out this tax avoidance scheme and money owed in future situations can now be claimed by local authorities. Rate avoidance schemes are now presenting wider issues across the UK and although the Council hasn’t lost out as rates are handed to Welsh Government, the loss is significant to the public purse. Editors note Public Safety Charitable Trust owes £336, 923. The Life Foundation Trust owes £60,732.