You are a struggling port business manager who gets a bill for three and a half years of backdated unpaid rates. Not only this, the rates you think you have paid as part of a bill to the port owner, have been paid after all.
So, you go cap in hand to the port owner, which has used the money to fill the hole in its books, and predictably has none left to pass on. Then, you go to appeal to the government agency which gave you the bill, only to find that you don't qualify for their appeals process because the bill you have been paying doesn't show a separate 'rates' entry.
No, it is not a Kafka drama, but a scenario which is playing out now across the UK's ports, resulting in business closures, staff redundancies and loss of trade.
Traditionally, port operators have paid a rent to the landlord port, which then paid a sum to the Treasury to cover business rates. But the Government's Valuation Office Agency (VOA), part of HM Revenue and Customs, has changed the system nationally so firms pay an individual rate based on the size of the premises they rent. Due to failings on behalf of the VOA, the charges have been backdated to April 1, 2005, leaving firms multi-million pound bills, money they say they have already paid.
Despite the downturn that threatens the economy, the British government is offering very little help. Small organisations are being faced with extinction from bills that amount to tens of thousands of pounds and larger organisations such as DFDS Tor Line, which has already been forced to cut 10% of its staff as a direct result of the rates rises, now faces a backdated demand of £9.9m.
Two stevedoring companies in Liverpool have already closed, with the loss of 27 jobs. A major company faces a 400% rates increase, with a demand for £2.6 million worth of backdated liability. One company has received a final demand for £500,000 for 2008-09 and, six weeks after lodging an unanswered appeal, is considering its future. This is only the local situation in Liverpool, the country wide problem is much graver, with one estimate that as many as 700 businesses are affected.
The rot does not extend only to British companies. Last week in the Houses of Parliament, a letter was read out from BMW, in which the company said that it was 'extremely concerned about the prospect of increased costs as a result of the change', adding that this would lead to the company being 'forced to re-examine its decision to handle their UK distribution from the ports of Immingham and Southampton and instead move the operations back to the port of exit on the continent'.
Further, points out the MP for Brigg and Goole, Ian Cawsey, the appeals process is 'nonsensical', likening it to being asked to unscramble an omelette. He explains, 'The idea that people can now unpick the rent from their cumulo [the combined charge operators were paying to the port owners], but that if they cannot do so they cannot have a fast track appeal, is a bit like handing back an omelette to the chef and saying, 'Give me the yolk.' They cannot do it because there is just an overall figure.'
The government's proposal to spread the backdated element over eight years does not resolve the problem, say the ports. Not only does the downturn make recouping this kind of money difficult for many operators. A liability on the company account books shows on the year it is raised, which could push companies into technical, followed by real insolvency, as credit can not be raised by a company which is even 'technically' holding this kind of debt.
However, despite the obvious problems of trying to collect debts from insolvent operators, this argument looks like running on. John Healy, Minister of State at the Department for Communities and Local Government,is still saying that there is no way the port business can simply forego a tax that they are legally liable for. Despite further meetings agreement seems no nearer - although Mr Healey has agreed to take up the matter with the VOA.
