Business rates fraud increase is driving Councils to take action

Recent figures released by the CIPFA Fraud and Corruption Tracker (CFaCT) reported that business rates accounted for the largest growing area of fraud in Local Government with figures more than doubling from £4.3m in 2016/17 up to £10.4m in 2017/18. The report goes on to say that Business rates fraud covers any fraud associated with the evasion of paying business rates including, but not limited to, falsely claiming relief and exemptions where not entitled.

This coupled with the revised deadline of all Authorities being expected to retain 75% of the business rates they collect by 2020, means it is now more important than ever for Authorities to look at how they can maximise collections in this area and help root out the cause of fraud and error.

Tackling business rates fraud
Over 50 English Local Authorities are already one step ahead having signed up to use HUB the small business rates relief solution launched by Destin Solutions in February this year.

At a recent Open Day hosted by Destin Solutions, the Kent Intelligence Network reported that bills had been sent out for an additional £209K due to incorrect or fraudulent claims which HUB had identified. Similarly, Andrew Taylor, Fraud Manager at Preston Council noted that they had cancelled just under £175K worth of Small Business Rates Relief. Andrew commented “The system is extremely easy to use and without it we would have had no way of knowing that businesses had premises elsewhere.”

HUB brings together all the business rates information published by English Councils and Authorities can access this data from a single platform. Using the ‘find a ratepayer’ feature Authorities can use it as a quick reference tool to verify new applications for relief as they come in. Robin Gibbons, Business Rates Billing, Valuation & Support Manager at Bolton Council notes that “HUB has enabled us to identify accounts receiving small business relief, where the company is also the ratepayer in another area of the country, information we cannot obtain any other way. In addition, using HUB means we can now check new applications to ensure the company is entitled to the relief it is claiming.”

Developing a long term solution for business rates fraud

Plans for further development are underway ensuring the long-term viability of HUB, incorporating additional datasets from the Charity Commission and HMRC Community Amateur Sport Club. The ability to match against these datasets will mean that Authorities can verify whether ratepayers are still classed as Charities and Sport Clubs and therefore still entitled to obtain relief.

Paul Manning, Revenues Manager at Cheshire East Council another HUB user says “The Destin HUB is incredibly easy to use and has so far proven very effective. It has played a fundamental role in our Small Business Rates Review and has so far identified and confirmed around 17 cases where Small Business Rates Relief has been awarded incorrectly with a potential 30 pending further enquires.”

Collective feedback suggests that Small Business Rates Relief can have a big impact on Local Authority income and a tool like this can help identify thousands of pounds worth of incorrect awards. Tackling tax avoidance and fraud has never been more important in an era where many Authorities are struggling financially and operating with restricted budgets.

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