Aberdeen City Council to increase pressure on struggling businesses as unpaid rates soar

Aberdeen City Council could be set to take a “more proactive” approach to struggling businesses that are contributing to the sixfold rise in unpaid business rates in the Granite City.

The comments from Finance convener Willie Young suggest the local authority may be prepared to usher businesses more quickly into liquidation after it was forced to write off almost £183,000 last year.

Mr Young’s intervention comes as new PwC data showed Scottish shops were closing at a rate of more than one each day and new research by Aberdeen & Grampian Chamber of Commerce for law firm Ledingham Chalmers, and architects Keppie revealed that most north-east property-related businesses have suffered a slump over the past year and 70 per cent have seen profitability fall.

A recent report by the Aberdeen City Council’s finance chiefs concluded that the rising trend of unpaid business rates “will not affect services” because it had been allowed for.

But finance committee opposition member, Martin Greig of the Liberal Democrats, claimed: “Unpaid debt is turning into a massive problem for the council.

“The consequence is that there will be less funds for council services. The likelihood is that services will suffer.”

Since 2010, the council has written off over £683,000 in unpaid business rates – increasingly from firms which have gone bust and can no longer be pursued for the money.

They accounted for 82 per cent of the “unrecoverable” business rates last year.

Mr Young said part of the problem was caused by unscrupulous bosses using loopholes to shut down operations – and reopen quickly in a different guise.

He suggested action was needed by the Scottish and UK governments and HM Revenue and Customs to clamp down on that blight.

He added: “We’ve got to be more proactive. We cannot allow this to keep going.”

Changes could include a “flagging-up system” to spot mounting debts “after six months rather than allowing it to go on for a year”.

Mr Young said: “It’s a difficult climate, but there is a balance to be struck.

“At the end of the day, people pay their taxes.

“We expect people to pay their council tax or business rates. There should not be any exceptions.”

In just five years, the total amount of business rates written off has soared from £20,804 to hit £683,117.

In 2010-11, none of that was down to receivership or liquidation but it was £3,673 the next year, then £27,000, £28,000 and £95,000.

The sums are on top of £771,657 in council tax which has been written off in the last 10 years, despite recovery efforts.