A NUMBER of “previously unknown” Bradford businesses registered to pay business rates for the first time this Spring in order to take advantage of the Government’s Covid business support schemes.

A Bradford Council report into Business Rate collections in 2020 shows that the level of outstanding business rate debt for the 2019/20 financial year was over £1 million higher than expected.

The document, which will be discussed by Bradford Council’s Corporate Scrutiny Committee on Thursday, says this increase was partly due to a “significant” numbers of businesses that registered for business rates for the first time in March/April, and saw their rates back-dated to when they first began trading.

In March the Government announced a nationwide lockdown to try to halt the spread of Covid 19. Because this would require many businesses across the UK to shut, the government announced a financial support scheme for businesses to keep them afloat at a time when income was likely to plummet.

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One of the conditions to be eligible for the grants was that businesses needed to pay business rates.

The Council report says this requirement led to a large number of previously un-registered businesses coming forward to pay rates in the weeks after the support was announced.

In Bradford the two business support schemes provided grants to over 10,900 businesses across the District; with payments totalling in excess of £124m.

The Committee, meeting online, will hear the pressures in collecting business rates in the past year, and that the Council has not taken any formal action for late payments of rates due to the difficulties facing businesses.

Business rates are set by the Government, but collected by local Councils.

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

Business rates are one of the main sources of income for Councils, and are used to fund services such as social care, highways and bin collections.

In Bradford there are around 19,500 Business Rate bills issued each year.

However, once exemptions and reliefs are applied, the actual number of accounts to be collected reduces to around 11,000.

In the 2019/20 financial year, which ended in April, the Council had to collect £141,457,000 of business rates. However, so far only £137,359,000 has been collected, with Council officers working to recoup the remaining £4.09m debt.

The report says: "The outstanding debt for 2019/20 is around £1m more than would normally be expected.

"This is a consequence of previously ‘unknown’ businesses registering for business rates in order to take advantage of the Government’s business support grant schemes, and constraints on collection activity.

"A business that has been in occupation for a period before it is registered for business rates will have the bill backdated to the date of first occupation. In cases where such a business registers early in the new financial year, a debt is created for the previous year, adding to the outstanding debt for that year.

"This happens every year to some extent.

"However, the number of businesses registering from late March into April and May, in order to take advantage of the Government’s grant schemes, increased significantly; and in doing so, created a larger debt for 2019/20 than would normally be expected; as well as saying larger units were in multiple occupation where previously they had paid rent & rates inclusive."

The report also details how businesses that have not paid their rates have been given more leeway this year. It says: "Covid 19 and Government restrictions since March have made trading conditions extremely difficult for many businesses. The Council always aims to support businesses when they are facing financial difficulties.

"Consequently, a softer approach to collection has been taken this year. Many businesses have been contacted to discuss their arrears, but no formal action has been taken for late payment."