Yorkshire businesses using SNAIL farms to avoid paying tax

Snail farms are being used in Yorkshire (stock image)
Snail farms are being used in Yorkshire (stock image)
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AMONG shops, bars and restaurants, Bradford city centre is also home to a number of snail farms – businesses which are exempt from paying business rates.

Members of Bradford Council were being given an update on business rate payment in Bradford when they heard that a number of building owners were using methods to avoid paying rates.

This include designating buildings as snail farms, meaning they would be classed as agricultural use, and thus exempt from business rates.

Business rates are one of the main ways local Councils fund services, and have become increasingly important in the light of reduced government funding.

Rates are set by government, but collected by local Councils.

Currently Bradford Council retains 49 per cent of business rates collected, 50 per cent is paid to central government, and one per cent is paid to the West Yorkshire Fire Authority.

The issue of business rate collection was discussed at a meeting of Bradford Council’s Corporate Scrutiny Committee at a meeting last Thursday.

Members were told that approximately 19,000 business rate bills are issued each year; but once exemptions and reliefs are applied, the actual number of accounts to be collected reduces to around 11,000.

In recent years the collection rate for business rates has been around 97 per cent.

The Council is currently pursuing uncollected debt of around £4.2 million, of which over £200,000 dates back to 2015/16.

A report to the Committee pointed out that often Business Rate debt has to be written off, such as when businesses are declared bankrupt or wound up.

As of December, £1.5 million of business rates were written off as uncollected debt, some dating back as far as 2009.

Last year there were 677 cases of unpaid debt passed to Enforcement Agents, who were were able to recover £1.35m in unpaid business rates.

Business Rates are also payable on unoccupied properties, and this often leads to building owners attempting to find loopholes in the system.

Martin Stubbs, assistant director of Revenue and Benefits at Bradford Council, told members: “A lot of people are now trying to use avoidance tactics. Some of these aren’t illegal.“We have a number of snail farms in the city. Because they are classed as an agricultural undertaking they are not liable for rates.”

In recent years a number of local councils have taken action against building owners that have set up “snail farms” to avoid rates. In 2018 Kirklees Council was awarded £16,000 costs following a successful prosecution for the avoidance of non-domestic rates in a snail farm case.

The committee was also told that a recent appeal against the Rateable Value set on purpose built doctors’ surgeries and medical centres resulted in Business Rate reductions of up to 70 per cent – back dated to 2005. In Bradford this resulted in approximately £10 million being refunded.

And members heard that the NHS recently appealed to gain an 80 per cent reduction in business rates on NHS Trust buildings. The appeal failed, but had it succeeded it would have cost Bradford £10 million in lost rates.

Mr Stubbs pointed out that one business successfully appealing against their business rates could lead to a major hit in the Council spending power. He added: “All you need is one appeal against rates going back 10 years, at £100,000 a year and you’re left with £1 million gone from the budget.”

Mr Stubbs was asked about what was being done to improve business rate collection rates. He said while it was important to boost collection rates, it was more important to try and increase the rates pool – and this could only be achieved by regenerating the District. He added: “It we boost regeneration we can grow the base. If we grow that base then that will help.

Collecting 96 per cent of £2 million is still better than collecting 97 per cent of £1 million.”