Council forced to write-off £1.1m business rates debt

Uttlesford District Council

Uttlesford District Council - Credit: Archant

TAX payers are set to lose £1.1million after the district’s second largest business rates payer defaulted on its fees – an “unprecedented” scenario which will impact on services in Uttlesford.

As exclusively revealed by the Reporter yesterday (Thursday), Eighteen Aviation Ltd, trading as Aero Toy Store and based at one of the hangars at Stansted Airport, defaulted on its 2012/13 business rates liability of £1,155,066.48.

Recovery action and legal proceedings have determined there is no prospect of recovering the amount due, according to Uttlesford District Council (UDC), with council chiefs advised there is no prospect of recovering the debt.

Last night, the cabinet reluctantly agreed to write-off the business rates arrears owed by the firm, which garages VIP jets at the airport.

The authority’s finance chief, Stephen Joyce, told the Reporter the council’s budget would not be directly affected but that less money would effectively be available to UDC, Essex County Council and the Fire Authority in 2013/14.

“This is a massive loss to the public purse but because the £1.1million is from 2012/13 it affects Central Government funds rather than the budget of Uttlesford District Council.

“What it does mean is that public services and Government spending will be affected.”

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As of the 2013/14 financial year, Uttlesford District Council will collect business rates and hand 50 per cent to central government, one per cent to the county council and nine per cent to the Essex Fire Authority.

It will keep the other 40 per cent, of which most has to be paid to central government under a “tariff” system, and spend the remainder, about four per cent, on providing district council services.

Previously, Uttlesford had collected the rates and handed them over in full to Whitehall before the money was redistributed across the country.

Asked whether the loss of £1.1million from such a large business rates payer would affect Uttlesford District Council’s future budgeting, Mr Joyce said: “It will have an effect on Uttlesford but not a significant one.

“The Government has a safety net scheme which ensures district councils do not lose a significant amount of money.

“The most we could lose is about £100,000, so it protects us from a large loss, but nevertheless it is a loss to the tax payer and that is why we are very disappointed at the situation.

“This is a genuinely unprecedented case – we’ve never had anything like this before and will be taking steps to make sure it doesn’t happen again.”

The council said it was currently waiting for a court date to be set for Eighteen Aviation Ltd to be wound up as an insolvent company and is continuing with legal action to prevent further irrecoverable funds becoming due.

It has taken the decision to write off the debt because of the belief that the company has no assets that can be seized and no money available.

Councillor Robert Chambers, portfolio holder for Finance and Administration, told Thursday’s cabinet meeting he intended to raise the case with the Department for Communities and Local Government.

The 18-acre Diamond Hangar facility, where Aero Toy Store is based, can house more than 25 privately-owned aircraft.

On its website the company states: “Landing at the Diamond Hangar is only the start of your joumey.

“Our exceptional staff, attention to detail and luxury facilities including 5-star dining, an elegant boutique, business suites and fitness studio appointed to the highest specification, all ensure a unique and enjoyable experience for our clients and crew.”