A recent case has given hope to business owners who receive late notices from Councils for business rates. In North Somerset District Council v Honda Motor Europe Ltd there were mistakes in the Council’s systems which led to them being late in sending notices demanding payment of business rates going back to 2002.The ratepayers, car companies Honda and Chevrolet and another individual owner, claimed that the notices were invalid and therefore no business rates were due. They also argued that it would be unfair to allow the council to claim the monies.
The High Court agreed with Honda and the other ratepayers that it would be unfair to allow the Council to collect rates after such a long time had passed on the basis that the delay had prejudiced the ratepayers. Had the ratepayers known about the amounts of rates due they could have taken steps to make sure they had the money to make the payments (for example in Chevrolet’s case by pricing their cars differently).
The High Court agreed with Honda and the other ratepayers that it would be unfair to allow the Council to collect rates after such a long time had passed on the basis that the delay had prejudiced the ratepayers. Had the ratepayers known about the amounts of rates due they could have taken steps to make sure they had the money to make the payments (for example in Chevrolet’s case by pricing their cars differently).
However, the court did not go so far as to say that sending the notices late would automatically invalidate the notices.
Why is this case important?
Local councils are the rating authorities and are legally obliged to send notices of the rates due as soon as practicable after 1st April in the year to which the notice relates.
If you are a business owner and have received a late rate demand (or have still not received one) it is possible that you can avoid having to pay the rates if you can show the Council’s delay has caused you substantial prejudice.
This is not guaranteed but in these difficult times it can be very serious for a business to find out, due to mistakes by the Council, that large payments are due for periods that are long past. This case gives hope to business owners that delays by the Council might allow them to avoid rates liability. However, you should remember that the case relates to business rates which are governed by Acts of parliament and will not necessarily apply to delays in other debt demands.
Further information
These notes are intended as general guidance only and should not be relied on in any specific circumstances without additional specialist legal advice.
Please call David Heys on 0116 212 1027 or Katherine Cereghino on 0116 212 1148 for more information or if you have any questions or you can email David at dheys@lawson-west.co.uk.
