Flintshire Council to write off £80,000 of business rate debt for Broughton Monsoon store

More than £80,000 worth of business rate debt looks set to be written off in Flintshire after a clothing retailer entered into a company voluntary agreement (CVA).

Monsoon Accessorize secured a restructuring deal last year to negotiate new rent payments with landlords.

It formed part of a bid by the firm to avoid entering into liquidation and ceasing to trade.

The company has a store at Broughton Shopping Park for which it owes business rates worth a total of £80,128.

Flintshire Council is now planning to write the sum off as irrecoverable due to the CVA, despite originally objecting to the arrangement.

In a report, Gareth Owens, chief officer for governance said: “Monsoon have faced very difficult trading conditions and in the last two years the retailer has closed nearly 40 stores due to the challenges facing the British high street.

“As part of its restructuring plans, Monsoon had concluded that its rent and occupancy costs were unaffordable and the company proposed a CVA, principally to negotiate new rent levels with landlords across the UK.

“CVAs are intended to be used by companies as a means of restructuring the business to avoid entering into liquidation and ceasing to trade, but they have become more common with national high street retailers in recent times as CVAs can mitigate high street commercial rents and business rates liabilities.”

“In June 2019, as a creditor for business rates, the council received notification from Deloitte LLP of Monsoon’s CVA proposals.

“Despite the council objecting to the CVA, at a meeting of the company’s creditors on the 3rd July 2019, Monsoon’s CVA was passed by its creditors by a significant majority.”

Since the store in Broughton opened in 2005, Monsoon has paid the council in excess of £1.18m in business rates.

The council was originally owed an outstanding amount of almost £118,000, but secured a partial repayment of close to £38,000.

The authority is not able to take any legal action in relation to the remaining debt due to the agreement.

Monsoon was said to be trading well following the CVA being put in place, but is now believed to be considering a sale after being badly affected by the coronavirus pandemic.

Mr Owens said the council would still ensure the company pays its rates for the current financial year.

He added: “Writing off the debt contained in this report, amounting to a total loss of income to the National Collection Pool for Wales of £80,128 is being recommended as a last resort and only on the basis there is no prospect of successfully recovering the debt.

“There are no direct revenue implications for the council or local council tax payers, as the cost of writing off this debt is borne by the National Collection Pool.

“But as the collection pool is supported by Welsh Government, non-payment of business rates does though have a wider impact of the Welsh taxpayer.”

The write off requires the approval of the authority’s cabinet member for corporate management and assets, Cllr Billy Mullin, before it can go ahead.

The council said it had changed its processes during the COVID-19 outbreak so urgent decisions can be made by individual members of the ruling Labour administration.

Liam Randall – Local Democracy Reporter (more here).