Closed down firms leave a trail of debt

Coun­cil is forced to write off more than £500k

Lennox Herald - - NEWS - Jenny Foulds

De­funct busi­nesses across West Dun­bar­ton­shire have left a trail of debt, ow­ing more than half a mil­lion pounds to the pub­lic purse.

The coun­cil last week wrote off £535,646 in un­paid busi­ness rates, the to­tal amassed by firms across the area who have ei­ther dis­solved or gone into liq­ui­da­tion.

Juice bars, car garages, fur­ni­ture shops and clothes stores racked up the enor­mous debts — in­clud­ing one which was in the red by al­most £50,000.

Coun­cil­lors on West Dun­bar­ton­shire Coun­cil’s cor­po­rate ser­vices com­mit­tee agreed to write off the Na­tional Non Do­mes­tic Rates (NNDR), some of which date back to 1993, af­ter they deemed them ir­recov­er­able at a meet­ing last week.

But mem­bers said more must be done to chase com­pa­nies, which are de­priv­ing the pub­lic of large sums of money which could be oth­er­wise spent on key lo­cal ser­vices.

Chair of the com­mit­tee Kath Ryall said: “These amounts are sub­stan­tial. When we look at this in de­tail the back­ground is not go­ing to sur­prise any­body. Un­for­tu­nately, there are clearly busi­nesses who see the root of dis­solv­ing their com­pany as the mech­a­nism of avoid­ing pay­ing NNDR.

“There are lots of is­sues. Some­times the land­lord in the prop­erty is un­aware of what is go­ing on and who­ever is run­ning the prop­erty might be sub­let­ting it out with­out the land­lord be­ing aware.

“The is­sues are re­ally big­ger than we as a coun­cil can deal with.

“These are taxes which are owed by peo­ple and they need to be paid in or­der for fair­ness.

“It’s a lot of money but it’s a dif­fi­cult prob­lem to ad­dress.”

Busi­nesses, which had their debts writ­ten off in­cluded New­port Hos­pi­tal­ity Ltd, which op­er­ated in Dum­bar­ton and owed £10,152 but has since dis­solved.

Dum­bar­ton Car Re­pair, which has gone into liq­ui­da­tion ac­cord­ing to the coun­cil re­port, fea­tures promi­nently in the list.

The firm is said to have owed £6,241.19 in rates from 2011/12, £11,756.25 from 2012/13, is listed as ow­ing £12,069.75 and £12,304.88 from 2013/14, and £6,681.15 from 2015/16. Xtreme Soccer in Castle­green Street, Dum­bar­ton, is listed as be­ing £7,049 in the red in 2014/15 and £10,824 in 2015/16.

A com­pany in Cly­de­bank, TFB (Fur­ni­ture) Ltd, in Syl­va­nia Way, hiked up the most debt, sit­ting at al­most £50,000 in the red.

Dum­bar­ton coun­cil­lor Ge­orge Black ques­tioned: “How can a com­pany over a five-year pe­riod rack up £50,000 of debt and how can a £50,000 debt be ren­dered as un­re­cov­er­able?”

Coun­cil­lor Ryall replied: “That com­pany went into liq­ui­da­tion so at that point there’s very lit­tle that can be done.”

He also raised con­cerns over failed com­pa­nies spring­ing back into life un­der a dif­fer­ent name, adding: “When you see a com­pany ap­ply­ing un­der a dif­fer­ent name un­der the same prin­ci­ple alarm bells should be ring­ing.”

The meet­ing heard that the prob­lem is be­ing ex­ac­er­bated by the le­gal prac­tice of com­pa­nies go­ing bankrupt, only for a se­cond so-called “phoenix com­pany” to start up overnight with the same di­rec­tors, but with­out any obli­ga­tion to pay their old com­pany’s debts.”

Coun­cil of­fi­cer Arun Menon, busi­ness sup­port man­ager, agreed it was a prob­lem which was very dif­fi­cult to bring un­der con­trol as failed di­rec­tors may set up a new com­pany un­der rel­a­tives’ names in­stead of us­ing their own.

Lomond coun­cil­lor Jonathan McColl ques­tioned whether the coun­cil could in­tro­duce mea­sures such as dish­ing out penal­ties, re­vok­ing trad­ing li­censes and re­quir­ing firms to pay do­mes­tic rates on a more fre­quent ba­sis rather than an­nu­ally.

Coun­cil­lor John Mooney added: “UK com­pany law seems to be ex­tremely weak in a lot of ar­eas.

“I would re­ally wel­come Scot­tish Par­lia­ment be given the op­por­tu­nity to look at this.

“We have to get a lot more smart. This is detri­men­tal to the pub­lic purse, with a debt of £50,000 racked up by one com­pany. We don’t have the teeth to deal with that.”

Last year, the Lo­cal Gov­ern­ment Au­thor­ity called for new pow­ers to al­low coun­cils to sus­pend the li­cences of busi­nesses fail­ing to pay their rates, adding that un­der cur­rent laws au­thor­i­ties can­not refuse or sus­pend a premises li­cence for an out­stand­ing busi­ness rate debt.

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