The Government's solution
137. In the Pre-Budget Report 2008, the Government
announced an extension in the payment period for port businesses:
To reduce the cash flow impact on businesses, given
current economic difficulties, the Government will legislate to
give businesses more time to pay certain backdated business rates
bills issued before 31 March 2010. Businesses facing such bills
will be able to pay their liability for previous years in equal
interest-free instalments over 8 years, rather than immediately.
Beneficiaries will include several occupiers of ports who have
been affected by recent rating reviews.[166]
138. A firm is insolvent if its liabilities are
greater then its assets. Where directors continue to trade despite
being insolvent they are vulnerable to charges of wrongful trading.[167]
A charge of wrongful trading will make directors personally liable
for the debts of their companies.[168]
We have received clear evidence that firms will be forced to declare
themselves insolvent.[169]
139. The Government's proposal
to extend payment terms for port businesses comes too late for
those firms which have already ceased to operate in the face of
the huge rates bills presented. It is probable that, even with
an eight year period to pay, the backdated and prospectively increased
rates bills may make many firms technically insolvent.
We recommend that, in recognition
of the fact that the Valuation Office Agency is to blame for the
situation faced by the port firms, the Government takes steps
to mitigate further the difficult position faced by port businesses.
Consideration should be given to the proposal to maintain the
rateable values of premises in statutory docks and harbours at
the levels published in the April 2005 rating lists until the
new ratings list is published in April 2010.
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