Third Defeat for Government Over Port Rates Leads to Renewed Calls for Action Concern Over Loss of Foreign Investment in the UK
Following a further victory in the House of Lords for the campaign to remove unfair, backdated rates at UK ports, Andrew Finfer, a partner in Schofield Sweeney's Leeds office, who is adviding the Humber and Mersey Docks Rating Group, called for the Government to remove any uncertainty about the imposition of retrospective business taxes by implementing amendments to existing regulations. Failure to do so, he says, will see more businesses close at UK ports and will act as a major disincentive to multi-national businesses considering setting up or continuing operations in the UK.
In a debate in the House of Lords on Wednesday 14 October, Lord Michael Bates, deputy Chairman of the Conservative party, highlighted not only the loss of jobs and businesses in UK ports, caused by the imposition of backdated rates, but also the damage to the UK's reputation abroad. The House heard a call for a review of the work of the Valuation Office Agency (VOA) and a moratorium on payment of backdated rates until the review has been carried out. Lord Bates expressed concern that the imposition of retrospective taxation without fault on the part of the taxpayer was damaging the UK's reputation abroad and causing international businesses to consider either repatriating their existing investments or cancelling planned investment in the UK. This damage, Lord Bates told the House, was in addition to the closure of businesses and loss of jobs at the ports caused by the imposition of backdated business rates.
During the debate, Lord Bates confirmed:
"What her Majesty's Government should know is that we on this side of the House will take every opportunity to raise the matter in order to protect vital jobs, because the threat is real. The conduct of the Valuation Office Agency has been shambolic and the culpability of the Government in failing to address this manifest injustice . . . is lamentable."
The Government suffered its third defeat on the imposition of backdated business rates when Conservative, Liberal Democrat and Cross-Bench peers overcame a Government three line whip and carried Lord Bates Motion of Regret by six votes.
Andrew Finfer, a lawyer with Schofield Sweeney solicitors in Leeds, is advising the Humber Docks and Mersey Dock Ratings Group on this issue, he commented:
"The Government is defending a system that is not equitable to all. If the VOA make one type of mistake, there is no imposition of backdated liability when the mistake is corrected. But, if the VOA make another type of mistake, backdated liability is imposed when the mistake is corrected. This system does not treat businesses equally or promote fair competition. Whether a business has to pay backdated business rates depends on which type of mistake the VOA makes.
“We would prefer that the VOA did not make mistakes. If they do, backdated liability should be imposed if the mistake is caused by the ratepayer. It should not be imposed if the mistake is caused by the VOA. Simple and effective. We have provided to the Minister responsible, John Denham, an Opinion from an extremely well respected specialist rating barrister and who advises and acts for the Government in rating matters. In Counsel's Opinion, John Denham has the power to change with retrospective effect an existing Regulation to provide that there is no imposition on port occupiers and other ratepayers of liability to pay non-domestic rates without error or default on the part of the ratepayer. The effect of such a change will be to remove backdated liability to pay non-domestic rates from port occupiers. It is the change that the House of Lords voted for in respect of the Business Rates Supplements Bill on 9 June 2009, defeating the Government by 60 votes, and which was then over-ruled by the Government.
"The Government's willingness to impose backdated liability for non-domestic rates, without error or default on the part of the ratepayer, is a major disincentive to multi-national businesses considering setting up operations in the UK or continuing their existing operations in the UK. In our view, the Government is well advised to dispel any uncertainty about the retrospective imposition of business taxes by making the proposed amendments to existing Regulations. The retrospective imposition of business taxes, when the tax payer is not at fault, is not perhaps the best way to promote the Government's commitment to working with businesses to restore the UK economy to robust good health."
Kieran Hall, Chair of the Mersey Dock Rating Group, added:
"It is striking that the Business Minister, Lord Mandelson, has been quick to jump to the defence of MPs in the current expenses debacle, stating that he understands their outrage about having to pay retrospective expenses when they had followed the rules of the House, and yet he has chosen to ignore a similar plea from businesses at British ports who, out of the blue, have been told they must pay crippling, backdated rates because the rating office made mistakes four years ago, despite the fact that the affected businesses abided by the rules and paid what was due at the time. Is it because Lord Mandelson is in-tune with the Westminster village but cannot relate to the grittier, real world of British docks?”
David Pendleton, Business Development Director for Mersey Maritime, added:
"The Mersey and Humber Docks Rating Group will continue to fight this issue, which is against all natural justice, until the Government sees sense and removes these backdated demands, which are crippling port based businesses and the communities that rely on them."
Issued 16 October 2009