By Stuart Hicks, Director
Plans by one of Scotland’s biggest councils to name and shame businesses that avoid business rates has been given cross party support.
The SNP-run Glasgow City Council has vowed it will start to “out” firms that fail to pay local taxes in the new financial year in a move to “name and shame” the tax dodgers.
Over Scotland as a whole, LAs are said to be missing out of £50m collectively every year through non-payment of business rates. Council officers in particular are said to be frustrated by the so called “phoenix” firms that go into liquidation, only to appear from the ashes and continue to trade but without the tax liabilities.
In a rare show of unity politicians from both the SNP and Conservatives have welcomed the move, and some have said they would like to see even more than just bad PR being threatened.
MSP Graham Simpson, local government spokesman for the Scottish Conservatives, has welcomed the initiative and said there was no excuse for people or businesses who deliberately avoid paying taxes.
Other Councils will undoubted be watching the outcome with neighbouring West Dunbartonshire also believed to have adopted to same name & shame strategy.
Glasgow City Council treasurer Allan Gow said it’s an open secret that a minority of firms exploit legal loopholes to walk away from tens and even hundreds of thousands of pounds worth of debt, over and over again.
“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.
New business rates’ legislation brings some tightening of wider anti-avoidance schemes but as one loophole is closed, another change to the system’s ever complex web of reliefs and rebates will signal opportunities elsewhere.
In England, for instance, council officials are now seeing the emergence of minimalist “micro farming” suddenly becoming popular as property owners look to exploit business rate exemptions relating to the farming sector – when one door closes another barn door seemingly opens.
It will be interesting to see if the Glasgow name & shame policy works on any level – the only real reckoning that counts will be if business rate receipts go up in correlation with the stance. The media will undoubtedly pounce and publish the first lists of avoiders with relish but after that? I can’t see a public finger-wagging being enough to get these firms or individuals to suddenly develop a sense of civic duty and readily divvy up five or six figure sums without the full threat/force of legal action behind it.