Photo Credit: Bobalicious London
Hackney Council was forced to write off over £2m in debts from unpaid business rates last year from enterprises hit by the recession, The Hackney Post can reveal.
The majority of debt was ruled irrecoverable due to businesses going bust during the economic crisis, because the debts were considered uneconomical to pursue or because owners had passed away.
The figures, which came to light in a Freedom of Information request, are a stark contrast to 2011-2012, during which debt that was recovered outstripped what was written off.
But the figures are an improvement on 2011, when the council wrote off almost £5,000,000 of business debt.
Councils are obliged to collect National Non-Domestic Rate (NNDR) from all commercial properties, and then hand it over to the national government to be redistributed.
Hackney Council does allow NNDR relief from business rates if companies can show they provide a community service, but critics say that the process to prove that has become too difficult.
Joana De Guia, owner of Victoria Park Books and spokesperson for the Victoria Park Traders’ Association, used to receive relief for literary events she used to put on but can no longer face the complex paperwork the council demands.
“You feel like a little cork bobbing up and down in an ocean of bureaucracy.
“In the olden days when [Hackney Council] were still printing money, they were very good if you were providing some kind of a service.
“But that’s all stopped. I made noises about applying last year but it has become so complicated that I just didn’t.
“The amount of information you have to provide now, it’s just not practical for a business of my size. They asked me the number of children I’ve helped in the last year for example. How could I know that?”
In October, the government announced a postponement in business rates revaluation until 2017, a decision that will hit 40 per cent of retailers, investment management company Jones Lang Lasalle, which specialises in real estate, claimed in a recent report.
Upon releasing the data to The Hackney Post, the council said: “The figures also include debts written off for specific reasons, such as manual Council Tax Benefit adjustments; debts where the liable person is either deceased or has been made bankrupt; debts remitted by Magistrates; and debts that are uneconomic to pursue.
“Given this, the figures cannot be viewed simply as unrecovered debts, because in all of these examples the debts would be irrecoverable in any case.
“The annual figures vary widely year to year. This is partly due to Hackney’s policy of continuing to pursue all debts until they are proven to be irrecoverable.”
