Small business owners at risk of jail over tax debt

AT LEAST one small business owner a week is facing prison for failing to pay their business rate bills, research has revealed.

Courts in England and Wales handed down 54 prison sentences of up to 90 days on business owners for non-payment of rates to the end of March, up from 52 the previous year, according to figures by CVS.

The figures come as businesses struggling with crippling rate bill hikes since the controversial recent revaluation in April are being warned to pay up or face prison.

One local authority in Hambleton, North Yorkshire said in August it was launching legal proceedings for committal to prison for business owners who fail to pay a rates debt.

CVS, which uncovered the figures through a Freedom of Information request to the Ministry of Justice, said small business owners are most at risk from falling behind with debt payments.

While limited companies can be placed in administration if they are unable to pay such debts, sole traders can ultimately face prison. The recent business rates revamp has seen firms across the UK hit with soaring bills after the value of properties has rocketed since the last overhaul seven years ago.

CVS CEO Mark Rigby said: “It is the only tax not related to the ability to pay, so it places both a disproportionate financial and legal burden on sole traders.”