DCLG: Bob Neill - Backdated port tax burden finally lifted

Port-based businesses facing unfair and unexpected backdated business rates bills can breathe a sigh of relief, Local Government Minister Bob Neill said today, as Government action to waive and repay their bills has finally lifted their heavy debt burden.

Bob Neill at AB Ports in Ipswich

Visiting AB Ports in Ipswich, Mr Neill said that the Government's work to support port businesses - the backbone of Britain's global export industry - has already helped them continue to thrive and grow, and that they would now be able to move forward confidently without the unexpected return of extortionate business rate bills.

A review of ports by the Valuation Office Agency in 2008 meant that many port-based companies faced business rates bills backdated to 1 April 2005, cumulatively reaching into the millions. Many businesses campaigned against the demands as they were seriously damaging the industry's competitive advantage.

Government action to cancel these unfair, retrospective rates bills means that port-based businesses can now either scratch the debt entirely from their records or, if they had paid their bills already, expect a rebate in the near future. The policy will also benefit businesses outside of ports, which meet the criteria.

Local Government Minister Bob Neill said:

"For too long this unfair backdated port tax took its toll the port industry, with unexpected million pound bills damaging the businesses at the foundation of this country's import and export infrastructure.

"The Government took swift action to reverse these effects - our freeze on paying the backdated tax helped prevent job losses and let companies plan for the future. And from 31 March, affected businesses in ports and across England, can at last breathe a sigh of relief as our action to waive their bills is completed.

"Now the looming threat of the unfair backdated port tax is finally behind us, I'm confident that the industry can move forward with putting that money to its rightful use - to build up their businesses, retain jobs and benefit from international trade."

David Pendleton, Business Development Director for Mersey Maritime said:

"Mersey Maritime has been closely involved with this campaign from the very start, helping to bring together the Mersey Dock Rating group and working with other affected port based businesses around the UK. We are delighted to see our combined efforts come to fruition with the lifting of this grossly unfair financial burden.

"At least 70 firms and 3000 jobs were estimated to be under threat on Merseyside and this in the midst of the worst recession in living memory. The Government's determined effort in first freezing backdated payments and now removing them altogether means that these companies can finally concentrate on moving forward and creating jobs and wealth for the wider economy, which is vital at this time."

Kieran Hall, Managing Director of Denholm Handling and Chair of Mersey Dock Rating Group added:

"The current Government has been totally consistent in its approach to resolving this matter, even prior to taking office, which gave all of the affected businesses the confidence that a positive outcome would eventually be reached. That point has now been reached and we are immensely grateful."

Notes to editor

1. Until 2008, a number of businesses in each of the 55 statutory ports in England (approximately 700) and Wales, understood that they were not individually liable for businesses rates, as they believed that there was a combined bill that was paid by each port operator (their landlords) on behalf of all the firms within it.

2. Following a review the Valuation Office Agency decided that each firm must each pay an individual business rate bill, declaring them all 'separate occupations'. The Agency retrospectively backdated the rating list, which led to new tax bills for local firms to 2005, as required by legislation.

3. From 31 March, affected businesses will be able to either waive or reclaim the bills incurred under the 'port tax'.

4. In Wales, this is within the remit of the Welsh Assembly Government. Wales has been given funding under the Barnett formula to reduce bills for firms in Welsh ports. However, the Welsh Assembly Government has resolved not to pass on these tax cuts.

5. Estimated value of the waived tax bills across England will total more than £66 million. A full list of estimated waived bills is below:

These figures are based upon Valuation Office Agency data as at 30 April 2010. The number of properties and rates cancelled may reduce by:

• appeals that have been subsequently determined
• the actual levels of relief granted are greater than the general assumption
• companies who have gone bust will not receive a refund
• these figures are maximum limits because the data accounts for only one of the eligibility criteria (backdated liability of more than 33 months)

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