Flintshire Council to write off nearly £40,000 debt tied to Hong Kong firm’s ‘irrecoverable’ rates debt
Nearly £40,000 worth of business rate debt tied to an overseas company looks set to be written off by Flintshire Council chiefs as it is “deemed to be irrecoverable.”
Outsourced Fulfilment Services Limited, which isn’t listed on the UK’s Companies House, has accrued a debt of £36,798.
The company, based in Hong Kong, was determined to be liable to pay empty business rates from March 2022 to April 2023 for the premises listed as ‘The Original Factory Shop’, Brunswick Road, Buckley.
The property has been vacant since September 2018. Yet, the unit had two separate short-term tenants responsible for business rates between 19th September 2018 and 28th February 2022.
These tenants incorporated just before starting their lease and swiftly entered insolvency after its inception. “This tactic can sometimes be used by tenants to evade Non-Domestic Rates,” states a report by Gareth Owens, Flintshire Council’s Chief Officer for Governance.
Mr Owens noted in his report, “Outsourced Fulfilment Services Limited became liable for business rates at the unit after receiving an email on 27th May 2022.
“The email, from the current tenant Pollco Trading Limited, confirmed the premises were sublet to Outsourced Fulfilment Services Limited starting 1st March 2022. The firm is registered in the Hong Kong Registry.”
“We received no business rate payments, and there was no correspondence from the directors of Outsourced Fulfilment Services Limited.”
Flintshire Council initiated legal action for the unpaid business rates. They secured Liability Orders in both September and October 2022 at Mold Magistrates Court.
Despite the involvement of Debt Enforcement Agents and conducting site visits, the council could not establish any contact with the company or its directors. Moreover, no assets were found for repayment.
With their exhaustive attempts to recover the debt, the lack of payment and engagement from this overseas firm makes any future collection appear improbable.
The council is left with an unpaid Business Rate of £36,798 leading to a suggested write-off.
Mr Owens remarked, “There aren’t any direct financial repercussions for the Council or local taxpayers in writing off this debt. The losses from business rates are shouldered by the National Collection Pool for Wales.”
“However, since the Collection Pool is funded by the Welsh Government, any non-payment does impact the Welsh taxpayer more broadly.”
“Only as a last-ditch effort, after considering there’s no hope of reclaiming the debt from the overseas firm, are we suggesting writing off the debt. This amounts to a £36.8k loss to the National Collection Pool.”
The decision to write off the amount needs the green light from the authority’s cabinet members. They are set to deliberate on the report in their upcoming meeting this week.
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