£1.5m a year lost to business rates avoidance in Flintshire

Flintshire County Council is backing Welsh Government proposals to strengthen anti-avoidance measures for business rates, warning that an estimated £1.5 million is lost to the local public purse each year through current loopholes.

The Council’s Corporate Resources Overview and Scrutiny Committee will consider a report on the consultation at its meeting on 12 June.

Across Wales, business rates avoidance is estimated to result in annual losses of around £20 million, or up to 2% of the total tax yield.

In Flintshire, with around 5,700 commercial properties generating £73 million in rates annually, this equates to an estimated £1.5 million.

Business rates are collected by local authorities but paid into a central pool managed by Welsh Government and redistributed to fund services across Wales.

Most businesses pay their rates correctly, but some landlords and owners use legal loopholes to avoid liability on empty properties.

Flintshire officers say many avoidance cases are currently impossible to counteract under existing rules.

Welsh Government has already introduced measures such as requiring longer occupancy periods before empty property relief can be claimed again, and allowing councils to inspect properties and request information from third parties.

The new proposals, set to take effect from April 2026, would define certain artificial arrangements as avoidance, require ratepayers to notify councils of relevant changes, and introduce financial penalties for non-compliance or false information.

Specific types of arrangements targeted include ‘phoenix companies’, non-commercial or minimal occupation, and the use of properties solely for rates mitigation schemes.

Flintshire supports the new measures, but the report warns they will increase workloads, disputes and legal challenges for council officers. The Council is proposing to recruit an additional full-time Revenue Officer from 2026/27 to manage the extra work.

The service currently operates with just 1.5 full-time equivalent staff, handling £83.7 million in annual billing. Without extra capacity, officers say it will be difficult to administer new compliance processes or defend an expected rise in tribunal cases.

The Council is also calling for Welsh Government to provide additional financial support to councils to fund legal costs where cases are contested in court.

Members of the Scrutiny Committee will be invited to comment on the draft Council response to the consultation, which will then go to Cabinet for approval.