Scottish council to crack down on ‘phoenix companies’ avoiding tax debt

Stephen West, chief finance officer at West Dunbartonshire Council, will recommend a “naming and shaming” approach to the council’s corporate services committee meeting next Wednesday.

The move aims to respond to a small percentage of companies avoiding the Non-Domestic Rates (NDR).

Around 1.6 per cent of businesses failed to pay their debt in 2017/18, which would translate into £1.43 million in lost income in 2018/19 if it remains steady.

If the new measures are approved, the council’s corporate debt team will still give businesses a fixed amount of time to pay off their charges, in line with NDR recovery legislation. A final recovery notice will be issued six months after the first instalment is due.

If payment is not received following the final notice, the council will publish the name, type of business, address, period of default and the total amount due. This will help residents make informed decisions about the businesses they engage with.

Officers hope the recommendation will lead to businesses working better with the council to take advantage of the supports available to them and settle their bills, before getting to the stage of being named online.

Mr West said: “Often companies we are chasing are dissolved or go into administration then re-appear almost immediately. The practice is often referred to as ‘Phoenix companies’ and allows the owners to avoid unpaid bills.

“Councillors have previously asked officers to consider how best to tackle this practice and our recommendation is now going to Committee to see if it meets their aspirations.”