When naming and shaming is the only redress left

By Stuart Hicks, Director.

A new year maybe but old habits die hard with a string of foreign embassies owing the taxman more than £1.5million of unpaid business rates.

Diplomatic representatives from foreign countries are exempt from national, regional or municipal taxes. But embassies are “encouraged” to pay a portion of their bill, equating to around 6 per cent of what a normal firm would pay – small change in the scheme of things.

But it would seem even these much-reduced sums are too much for some embassies to part with, and so the Foreign Office has now named and shamed 23 foreign embassies and diplomatic organisations that each owe more than £10,000 in business rates – bills that should have been settled 12 months ago.

As you all know business rates are based on the estimated rental value of a property and, bearing in mind the prime locations for embassies in London, the diplomatic set are getting an absolute bargain if they are only being asked to pay 6 per cent of the tally. 

It will be particularly galling for, say, struggling Debenhams which paid out £80million in business rates last year and John Lewis paid £174million, so £10,000 does seem like small change in comparison.

I remember writing a similar post a couple of years ago on this subject, but it appears that the situation is getting worse not better with the amount owed by foreign diplomatic missions and embassies having gone up by 43 per cent compared with a year earlier. 

Of the bills due to be paid on December 31, 2017, more than £73,000 of the debt is owed by Syria but I don’t think anyone in the Government is expecting a cheque from there anytime soon as the country is currently not represented in the UK.

And the biggest culprit? – the embassy run by Sudan  according to a written statement to Parliament by Lord Ahmad of Wimbledon.

The embassy – situated between Green Park and St James’s Park in London – owes £137,122 in business rates to the Government. Iran is next on the list with £123,570 in business rates debts, followed by Zimbabwe, which owes £101,694.

Embassies from Qatar, Ukraine and Egypt all have so far refused to pay their business rates, as have the High Commissions of Malaysia and Pakistan.

That’s quite a few IOUs to start the new year with and it seems the only redress the Foreign Office has when diplomatic requests and final demands have failed is to name and shame them. Hardly great PR for international relations though.