Failed and fleeing business have left the City with a trail of millions in unpaid rates that the corporation running the Square Mile has been forced to write off.
The City of London Corporation’s finance committee on 18 September agreed to write off £2.6million in irrecoverable non-domestic rates racked up by 33 companies and two individuals over the years since 2012.
In one case, a landlord racked up a bill of £1.76m in unpaid empty property rates, a report to the committee said.
They were told the unnamed landlord was in receivership by the time they took a building back from tenants, and the property was sold when the ratepayer was unable to pay their mortgage.
They subsequently went into liquidation proceedings and their business was dissolved.
In that case, the bank was the primary creditor and there was nothing left over for the Corporation following the liquidation, the committee heard.
Exhaustive checks and all recovery procedures steps had been taken to claw back the debts – but without success, a report to the committee said.
The rates dodgers’ debts were deemed irrecoverable under law because they had been in insolvency proceedings, or had ceased to trade, their businesss had been dissolved, declared bankrupt, or the ratepayers had “absconded”, the report continued.
Of the total rates wiped, £754,978 will be shouldered by the City Corporation and £22,965 from its additional premium levies.
Another £1.2m was due to be the government’s share, and £567,000 was the Greater London Authority’s.
The Corporation’s books showed that rates collection overall remained high, with all business rates due collected by the Corporation within the last financial year, and 98.6% of commercial rates.
The amount written off represented less than 0.5% of all non-domestic rates collected within each financial year.
At the suggestion of the members, chairman Jeremy Mayhew asked for the Corporation’s staff to look into the City’s collection methods so the committee could understand how to avoid being lumped with irrecoverable rates debts in future.
A member suggested irrecoverable debts should be dealt with straight away to avoid the Corporation, which has governed the key financial district for hundreds of years, facing lump-sum write-offs in a single financial year.
“You’re lucky we don’t have debts going back to the last century in this place,” Councillor Mayhew responded.