By Stuart Hicks, Director
Once again Scotland seems to be leading the way in new business rate policies with Glasgow City Council looking to adopt a policy of naming and shaming companies that avoid paying business rates.
The Council obviously believe that the court of public opinion may have more sway than their officers when it comes to encouraging firms to cough up, but having read a couple of articles on the subject it seems that they are targeting business that are using “legal loopholes” as opposed to simply not paying.
Whilst the Council don’t dispute the legalities of the avoidance tactics employed, they would be playing the moral card here and hope that firms will decide to pay up rather than face some sort of public relations backlash.
I understand the Council’s thinking on this, but it doesn’t get away from the fact the businesses being highlighted are perfectly entitled to explore and act upon any legal means to reduce their business rate obligations – so is it right that they are castigated publicly for doing so?
The new corporate debt policy has already been put forward to councillors and if agreed, firms that haven’t paid despite repeated requests and recovery action, this will be made public. The Council claims the firms are costing the city, in some cases, hundreds of thousands of pounds in lost non-domestic rates’ income. According to The Herald changes to business rates resulting from the Barclay Review does close some loopholes but for companies that still find ways of not paying, the council will let the public and, by default, customers know.
Councils in Scotland collect the business rates which go into a shared Scottish pot before being redistributed back to authorities, based on population and need. Last year Glasgow was allocated £340.8 million in business rates.
The City’s Treasurer Allan Gow believes the new policy will give people the right to know if firms they are dealing with are paying their fair share of tax. He said they always try and work constructively with businesses that encounter problems with rates, but it’s an “open secret” that a minority of firms exploit legal loopholes to walk away from five or even six figures liabilities, repeatedly; “While the law can’t always help us stop these firms from gaming the system, we can give communities and consumers the information we have and let them make up their own minds about that kind of behaviour.” he said.