Many warehouse operators and other companies that operate within the 56 statutory docks in England and Wales are facing a substantial retrospective tax increase following the Governments recent announcement that it intends to separately assess most individual occupations on the ports for the purposes of business rates.
Put simply, HM Revenue & Customs has changed its method of collecting business rates for companies based at ports and instead of charging landlords, it will now charge the occupiers.
Although the change is effective from April 2005, HMRC informed the occupiers of the changes in 2008 - three years after they were supposed to have come into operation.
HMRC is charging the new rates retrospectively from April 2005 and, as a result, some operators have received four years' worth of charges at once, leaving the firms with no chance to build these new charges into their costs, since they knew nothing about them.
Roger Williams, chief executive of the United Kingdom Warehousing Association (UKWA) comments: When the new tax regime was announced HMRC insisted that the bills must be paid out of profits for last year, the year before and the year before that. In a lot of cases, the operators profits will not cover them. UKWA understands that HMRC may subsequently have softened and is considering allowing the tax burden to be spread over a number of years but, so far, no formal agreement has been reached.
Roger Williams continues: In its usual style, the Government undertook little or no consultations before imposing this retrospective tax. The imposition of a tax which leaves many businesses facing bills running into millions of pounds would hardly be helpful at the best of times but in the current climate it is particularly damaging and causing great hardship to many operators. Indeed, the tax looks certain to bankrupt some companies.
Of course, bankruptcy means wholesale job losses and the Government will forfeit any future tax from the vanished companies, but typically that does not seem to have occurred to the present administration.
It is essential that companies who operate in quayside areas take advice and act quickly with regard to the management and mitigation of their rate liabilities.
Roger Williams adds: The difficulties facing property occupiers in Statutory Ports is very serious and they need high quality advice from an experienced Chartered Surveyor with rating valuation experience. UKWA members can receive very useful advice about this and other property matters as part of their membership package by contacting the Associations property advisors on a special helpline entirely free of charge.