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Can't pay business rates? A Worried Director's Guide

4th November, 2022
Robert Moore

Written ByRobert Moore

Marketing Manager


Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.

Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.

Robert Moore
  • How are business rates calculated and what do you pay?
  • Can my business rate value be challenged?
  • If you are struggling to pay your business rates, what can you do?
  • And what happens if I do not pay?

If you can’t pay your business rates it may be because you need to get extra reliefs from your local council or even challenge the amount that you have to pay. As such, it is worth understanding what they are and how they are calculated.

Note:  The business rates relief of 75% for hospitality, retail and leisure is due to expire in March 2024.

How are business rates calculated and what do you pay?

Business rates are taxes charged on most non-domestic properties, so for commercial purposes rather than residential i.e., shops, pubs, factories, holiday rental homes. Business rates are set as a percentage of a predicted rent that the premises could be worth in the open market, if it was rented out on a yearly basis. This is variable and based on the assessment of each business, comprising multiple factors. This explains why properties located in more desirable places i.e. a busy high street, attract higher business rates.

So, if the rateable value of the property is £50,000 per year you will pay 47.9% of this value (the multiplier) in taxes.

Be aware that the rateable value is not the amount you pay, it just assists in formation of the calculation of the exact rate/amount to pay. Your local council will issue a business rates bill each year (normally February/March time) for the following tax year.

For more guidance on this you can visit the Rating Valuation page of the Government website.

Can my business rate value be challenged?

It is possible to challenge your rateable value if it is incorrect. However, this is only advisable if the actual property has changed in its layout or has been impacted by other external factors such as infrastructure changes or access.  Ultimately, there must be a valid reason to support your appeal.

It is advised for you to research thoroughly before contesting, especially since an appeal could work in the outcome not expected, with the rateable value increasing. So do make sure to look for the rates of similar properties in the area (here) and compare – bearing in mind the varying factors which can contribute to differences.

If you are struggling to pay your business rates, what can you do?

Currently many retailers and small businesses are facing the prospect that they will not be able to pay the business rates to their local council, often forcing them to shut up shops.

However, this does not always need to be the case. Options are available if you are struggling to pay.

Firstly, it should also be noted that there are business rate relief schemes; check if you are eligible as this could work in your favour.

For those not meeting the relief scheme criteria, if you are having difficulty with payments, the first thing to do should be to contact your local council. Of course, it is never easy to admit the struggle to pay, but it is better to be honest that not, especially since 2010, when legislation meant that landlords must pay the full business rate for empty properties. Therefore, if they do not agree to work something out to keep the tenant in, then they will be left with the bill if the long run. So, if you discuss first, some sort of agreement may be settled, outlining a payment plan going forward, in your favour.

A company voluntary arrangement (CVA) is therefore an option. This is a formal deal which allows up to 60% of unsecured debt to be written off so you have substantially less to pay back in a debt repayment plan. The local council lists as an unsecured creditor in a CVA, so a proportion of business rate debt can actually be written off.

Alternate sources of finance should be considered since new funding could free up cash flow and allow you to settle some financial commitments. See various options here.

A creditors voluntary liquidation (CVL) may be an option you resort to – this is when the company director decides to liquidate the insolvent business.

And what happens if I do not pay?

Since business rates are run by local councils, they have the power to implement measures if payments are late or not paid at all. This involves:

  • Reminder letter (giving 7 days to pay)
  • Issuing a summons (the council inform you their attention to apply for a liability order)
  • Liability order goes ahead
  • Bailiff action can commence
  • Insolvency proceedings


Just make sure to communicate with licensed insolvency practitioners like ourselves, before taking any action as we can assist with your best options and help you avoid any unnecessary consequences.

If you can’t pay business rates, VAT or PAYE, see our advice pages in the HMRC and VAT section of the website.

Worried Director What Will Happen To Me After Liquidation?

in Company Liquidation What is …?

"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"Actually, this statement is entirely false! Misconceptions like this frequently arise from individuals with limited understanding of the subject matter. Such misinformation can cause undue anxiety for directors considering liquidation, fearing it might personally affect them. Guess what? Listening to bar room experts, inexperienced accountants, or no insolvency specialist lawyers can stop decisions being made, this failure to make a decision is really what could land you in trouble. So how will liquidation affect me and how long does it take? Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. What is more, if as a director, you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk of personal financial loss or worse such as losing your house. So, act now and get help for your company and more importantly start reducing your own risks.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years. This is known as a conduct report on each director.  If the OR can prove there was wrongful trading where, for instance, you have taken credit from a supplier or took deposits from customers when you knew that it was highly unlikely that you could pay them back, then you could be made personally liable.This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. If this happens then you could made liable for PAYE, VAT and creditors monies from the time that you should have known the company had no reasonable prospect of surviving the problems it faced.Additionally, the directors may face disqualification proceedings under the Company Directors Disqualification Act 1986 for up to 15 years, they can be fined and may face the loss of personal assets like your home, or even personal bankruptcy.Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved. What is Creditors Voluntary Liquidation and what does it mean for me? In short, liquidation usually means, the company's trading stops and it's assets are turned into cash or "liquidated".All other possible liabilities, like employment liabilities, landlord's rent or payments to lease companies are stopped. It really is the end of the company, but the "business" may survive if a phoenix is organised. Liquidation is a powerful way to END creditor pressure and let you get on with your life. What if I have signed personal guarantees? If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in: just think what ALL of the company's debts landing on your shoulders would do. Also it should be noted that HMRC now rank ahead of floating charge holders in any liquidation since December 2020.  Consequently, this may well mean that lenders that you have personally guaranteed will get less recovery hence exposing you more.All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.One great piece of FREE advice - always make sure that ALL tax returns, VAT returns and annual returns have been completed and sent in and that other "compliance" issues are dealt with wherever possible. These are important processes and will help protect you as individual directors. It shows that you have been acting properly.  I have heard about directors being able to claim redundancy in liquidation If you have been employed by the company and made payments via PAYE then you will be able to claim redundancy from the government and this is in fact a very simple process (20 minutes to fill out a form and we can help with that) so there is no need really to employ a third party to make a claim.  This process has been open to fraud so the HMRC are cracking down on operators that claim to be able to get money back when there is not enough "paperwork".  It isn't worth the risk.  If it sounds too good to be true then it probably is!You need to learn more about the options. This is clearly a general guide so, if you have any worries at all, please, just call us and we will talk you through the situation free and with expert guidance for your situation. Call one of our advisors or if you prefer, call our IPs (insolvency practitioners) now:Just one CALL will help relieve the stress and get you out of the mess.Why not call 08009700539 or 020 7887 2667 now?We could help you start the liquidation process today.(8.15am till 5.00pm; Out of hours call on 07833 240747, Wayne Harrison (IP)  or Eric Walls (IP) on 07787 278527)Finally, please remember this: NO BUSINESS is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go and you can focus on other things that are more important.Want more information on liquidation? Get our new free 2023 Experts Complete Guide to Creditors Voluntary Liquidation that covers Bounce Back LoansWe are experts in liquidation, voluntary liquidation, administration, pre-pack administration, business rescue, corporate rescue and company rescue, we can help solve your problems but only if you talk to us. Call 0800 9700539 for help.or email us your worries at 

Worried Director What Will Happen To Me After Liquidation?

Notice of Intention To Appoint Administrators

A notice of intention to appoint administrators is when the company files a document to the court to outline that it intends to go into administration if a solution cannot be found to its immediate financial problems. It can be used as part of the pre-pack administration process as well as used to restructure a failing business to avoid its liquidation.

Notice of Intention To Appoint Administrators
Man with umbrella

What Is A Winding Up Petition By HMRC or Other Creditor

A winding up petition is a legal notice put forward to the court by a creditor. The creditor petitions to the court if they are owed more than £750 and it has not been paid for more than 21 days. The application, in effect, asks the court to liquidate the company as they believe the company is insolvent.

What Is A Winding Up Petition By HMRC or Other Creditor

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