How Do You Manage and Resolve Business Rates Arrears?

Maintaining a transparent cash flow is crucial for business growth. In this regard, managing and resolving business rates arrears is very important. If you are a beginner or have already been associated with this, you will need to find a few answers. This article gives you an idea of how to manage and resolve business rates arrears.

 

How Do You Manage and Resolve Business Rates Arrears?

To manage and resolve business rates arrears is the foremost responsibility of the financial staff of the company. In this respect, it is imperative to communicate with the local council to discover options such as payment plans or challenging the amount owed. As a new businessman, you can get expert advice from companies regarding available options to manage business rates arrears.

How are Business Rates Calculated, and What Do You Pay?

Business rates are taxes levied on most non-domestic properties, that is to say, on businesses rather than homes, i.e., shops, pubs, factories, and holiday rental properties. Business rates work in that they are an estimated rent that the premises might achieve on the open market where it is let on an annual basis. There is a lot going on here, and it’s all scoreable, so it’s variable based on how your business is assessed. This is the reason the properties in more prime locations, e.g., busy high streets, are going for more business rates.

For example, if the rateable value of the property is £50,000 annually, you will have to pay 47.9% of this value in taxes. Note that because the rateable value is not what you pay, it helps the process of determining the exact rate/amount to be paid. Each year your local council will send you a business rates bill for the next tax year.

Can Business Rate Value be Challenged?

If you have an error in your rateable value, you can challenge it. But that only applies if the real estate was altered in terms of how the land is laid-out or if something in the environment around the property has impacted it (like new roads or access). After all, there needs to be good justification for your appeal to succeed.

You should do your homework on contesting if you do, as an appeal could go against you and the rateable value could also go up. So do ensure you check out the other similar properties in the area being offered and compare—taking into account the many different factors that can lead to differences.

Get Professional Advice

The business rate can be managed by business owners by assessing the rates themselves. However, they can always take help from an agent or rating surveyor.

The agents in the UK must follow the VOA’s agent’s standard to comply with the rules. The businessmen should also be aware of the rules of agent standards.

A rating agent who is a member of a professional organisation will also be liable to abide by the rules and regulations. Businesses can hire agent through one of the following professional organisation

• Royal Institution of Chartered Surveyors (RICS)
• Institute of Revenues, Rating and Valuation (IRRV)
• Rating Surveyors Association

The agents are allowed to charge a suitable fee from the companies for adjusting the business rates arrears.

You can get advice from an organisation that’s part of the RICS Helpline Scheme. The first 30 minutes of the consultation call are free.

Managing Business Rates

The business rates are too high for the small shop owners and business retailers to pay, so they may consider shutting down their businesses. Businesses must assess if they are eligible for any relief scheme designed by the UK government. However, this does not always need to be the case. Options are available if you are struggling to pay.

If businesses are not eligible for the relief scheme criteria and you do not have enough cash to pay, the first thing to do is to contact the local council. It is hard to admit that you do not have enough money to pay, but since 2010 the business rates rules are strict, especially when the landlords are liable to pay business rates on their empty properties also. So if the landlords are not willing to pay the business rate on the empty properties, then they are liable to pay the bill in the longer term. So it is better to discuss the problem with the local council to work out a middle way that is suitable to both parties.

A company voluntary arrangement (CVA) is an option if the landlords are not willing to pay the business rates. This arrangement is a formal deal that provides 60% of unsecured debt to be agreed upon so the landlords are liable to pay back less in the debt repayment plan. The local council lists the landlord as an unsecured creditor in the CVA, which allows a part of the business rate debt to be reduced. Alternatively, the new sources of finances should be considered by the landlords so they are never short of cash and complete their financial commitment on time.

A creditor voluntary liquidation (CVL) is also an option to consider. This option allows company directors to liquidate the insolvent businesses.

More Options for Managing Business Rates

Below are some other options that can help manage and resolve business rate arrears.

• Additional Finance

Exploring and managing more finances will reduce the need for going to the local council for debt reduction

• Debt Consolidation

You should consolidate multiple debts into one whole loan to manage cash flow and timely payments.

• Operational Changes

You should change the operational workflow so that the changes are fruitful, generating more revenue, and restructuring debts can help in managing cash flow.

 

Conclusion

To manage and resolve business rate arrears is important for businesses to grow and become debt-free. To manage the business rate, the first step is to go to your local council. There are other ways also, such as debt consolidation, making operational changes, and increasing finances so that the payment is paid in time and you don’t have to worry about cash in your company account.

Disclaimer: All the information provided in this article on managing and resolving business rates arrears, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.