LGA calls for new powers to suspend licences.
2016
On 20th September 2016, the Local Government Association (LGA) published a media release urging the government to issue new powers to their members regarding business rate debts.The release reads:
“Millions of pounds in unpaid business rates are having to be written off by cash-strapped councils due to a loophole in licensing and business laws being exploited….”
The LGA is calling for new powers to allow town halls to suspend the licences of businesses which wilfully or persistently fail to pay their business rates. Licences would only be reinstated when the debt has begun to be paid off. Under current licensing laws, councils cannot refuse or suspend a premises licence for outstanding business rate debts.
In the opinion of the LGA the problem is exacerbated by the legal practice of companies going bankrupt, only for a second so-called "phoenix company" to start up overnight with the same directors – but without any obligation to pay their old company's debts.
Newcastle upon Tyne is given as an example where it is stated nearly £1.5m of debt (over several years) has accrued from collapsing licensed businesses. How many of these business rise like phoenixes is not highlighted. We presume a number of these business failures are genuine collapses.
Details of how the new powers will be applied, including what would constitute ‘wilful’ or ‘persistent’ behaviour is not included in the release.
Whether these powers will be forthcoming, we will have to wait and see. We shall keep you updated.