Humber Dock starts legal proceedings against the Government

HUMBER and Mersey ports have confirmed that legal proceedings against the Valuation Office Agency (VOA) and Hazel Blears, Minister for Communities and Local Government have commenced.

The action seeks to prevent the insolvency of hundreds of port-based businesses, which are faced with crippling, unexpected backdated rates imposed by the VOA following its alleged failure to carry out its statutory duty in conducting a review of business rates.

The row began over the retrospective collection of National Non-Domestic Rates (NNDR), which resulted in businesses in Hull being presented with unexpected bills totalling more than £20m, including payments for this year and back payments to 2005

The judicial review is being brought by the Humber Docks Rating Group and the Mersey Dock Rating Groups.

The groups have applied to the High Court for a declaration that the demands for non-domestic rates imposed by the VOA are unlawful.

The proceedings will also seek to set aside the 2005 rating list and ensure that the rates of port-based businesses are not reviewed before the date of the next statutory review in 2010.

A report published by the Treasury Sub-Committee today backs the complaint concluding that VOA communication on the issue was “deficient”.

“In light of the failings of the VOA and the compelling evidence that many businesses are being forced to declare themselves insolvent, the Committee also recommends that the Government considers maintaining port ratings at the levels published in the 2005 lists until the next scheduled revaluation of statutory ports is undertaken in 2010,” it said.

 In his pre Budget report last November, Chancellor Alistair Darling, announced that the Government, as a means of assisting port-based businesses, would extend the period over which backdated rates were due for eight years.

However, affected businesses have pointed out that this solution is flawed as once the rates bill arrives, the liability has to be recorded on a company’s balance sheet.

If the bill is greater than the company reserves, then the company becomes insolvent regardless of when the liability has to be paid.

They claim that the only effective solution is for Ministers urgently to suspend the introduction of the current revaluation until 2010 and, in the meantime, allow businesses to pay rates in accordance with the rateable values notified to them in 2005.

Andrew Finfer, a partner with Schofield Sweeney Solicitors is advising businesses based at Humber and Mersey ports on this issue, said: “It is clearly irrational for the government to make businesses insolvent by demanding huge backdated business rates without warning and as a result of the failures of the VOA.

He added: “Making a company unable to pay tax in the process of trying to collect tax is not the most sensible method of revenue collection.”

“We have tried to explain to the Government both the nature of the problem and the solution to the problem. The government do not appear to be able to appreciate either. We have been left with no alternative to legal action.”

Operators in the UK’s other 55 statutory ports are also bracing themselves for similar backdated demands totalling millions of pounds, and 65 other commercial ports face re-assessment.

Leaders of businesses based in British ports estimate that, unless the ratings crisis is tackled by the Government, the industry faces the potential loss of business worth up to £20bn and job losses of more than 150,000.