Treasury says bogus charities dodging business rates

Widespread evasion and avoidance of business rates is eating into the £25billion a year raised through the tax, the Treasury has said. 

Some unscrupulous firms pretend to be charities while others falsely declare that their properties are empty. 

The key target for those abusing the system is the near-£5billion of reliefs granted to businesses. The Government has expanded support for some companies through rate reliefs during the coronavirus crisis. 

A sign of the times: Some unscrupulous firms pretend to be charities while others falsely declare that their properties are empty

A sign of the times: Some unscrupulous firms pretend to be charities while others falsely declare that their properties are empty

A sign of the times: Some unscrupulous firms pretend to be charities while others falsely declare that their properties are empty

It was already consulting on possible reforms to business rates. The tax has been long criticised for rising more rapidly than inflation. 

In its consultation document issued last month, the Treasury wrote: ‘There is evidence that some ratepayers are avoiding paying rates through the misuse of reliefs, particularly empty property relief.’ 

Some owners are granting leases on vacant properties to charities and are claiming that the properties will be used for charitable purposes when next in use. 

The exemption for insolvent companies has been misused by leasing properties to dummy firms that are later declared to have gone bust. 

Other owners claim rate relief on multiple properties in contravention of legislation. 

The Treasury could not put a figure on the total amount of money lost, but said: ‘The fundamental review of the business rates system will consider how the system can be made more robust to abuse.’

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