Recovering business rates from companies during the pandemic

18 May 2021
Recoveries review local authority


COVID-19 continues to cause issues throughout the world and as you know, local authorities continue to face challenges. When the Corporate Governance and Insolvency Bill was introduced in 2020, it was hoped that the COVID-19 specific measures would only be needed for a short period. A year down the line and the restrictions on winding up proceedings are still in place.

The restrictions are currently in place until 30th June, but with furlough being extended to September, there is a chance that the restrictions could be extended further. Whilst the bill makes it much more difficult to proceed against companies at this time, it does not mean that there is a blanket ban on local authorities pursuing companies for their unpaid rates or other debts.

Recent case law

The most reported case in respect of winding up petitions during COVID-19 has been Re A Company [2020] EWHC 1551(Ch). The Judge found that

(i) the evidential burden of showing COVID-19 had a financial effect on a company is on the company and not the petitioner;

(ii) whether COVID-19 has had a financial effect is a low threshold with no requirement to show that COVID-19 is the or a cause of the company’s insolvency;

and (iii) the burden of showing that the company would be insolvent, even if COVID-19 had not had a financial effect, is on the petitioner.

This means that there is substantial evidential burden on the petitioner to show that the company was insolvent prior to COVID-19. However, in the case of Newman v Temple Corporation Limited, the petitioner collated sufficient evidence to show that even before COVID-19, the company was not able to pay its debt and had been insolvent for a long time, therefore the petition could proceed.

So, what we can do to help you?

We have recently issued proceedings and passed the COVID-19 test by showing that a company was insolvent a long time before this due to its failure to pay its rates for many years. With many cases not able to proceed whilst the restrictions remain in place, we review the merits of each case and decide whether the company has been affected or whether the company is simply hiding behind the current restrictions. It is also important to ensure that the local authority is not looking to satisfy the COVID-19 test for the sake of it, and that winding up proceedings will achieve the right result.

Business rate grant recovery

Since the start of the pandemic local authority business rates teams have been under pressure to hand out business rate grants which has caused a variety of administrative challenges.

We are now receiving various queries whereby it has come to light that grants have been handed out wrongly, because of incorrect information provided by the individual or company.

In a recent example, we recovered a £10,000.00 grant from a limited company where incorrect information was provided on the application. This only came to light several months down the line and after the company had received the benefit of the grant.

We threatened county court proceedings against the limited company and prior to issuing the claim, the company repaid the grant in full to the local authority.

If it comes to light that a grant has been wrongly paid out, this is not the end of the line. There are various avenues we can explore to assist the local authority in reclaiming that money.

Please contact us to discuss any cases you have concerns on, so the team can advise whether action and potential recovery is viable.

Paul Bowden


01472 265982 Mob: 07780 336983

Alexandra Ottley

Senior Solicitor

01472 253946

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