Thursday, March 25, 2010

Shipping And Stevedoring Companies Go Broke In Business Rates Fiasco

Tories say they will Revise the Rules for Port Side Operators - Too Late for Some
Shipping News Feature

UK – Lord Bates, Conservative Party spokesman and Shadow Minister for communities, local government, energy and climate change, has stated that his party will cancel the uncollected debts of port side operators for outstanding business rates. The Tories do intend to charge the freight handling operators in future, but state that the unfair way the charges have been calculated and levied up to now have made the system unfit for purpose.

It is understood that the Conservatives are telling all local authorities that, should they be elected, none of the outstanding debts will be collected. The changes in business rate liability were introduced in 2005 and operators should have been invoiced immediately, not as in many cases, three years in arrears.

The situation was exacerbated as many landlords, who were previously responsible for payment of rates, often made no reduction in rents, simply pocketing the extra revenue. This combination of circumstances has been a factor in over a dozen port freight handling companies going to the wall.

Lord Bates said: “We object to the unfairness and the economic impact on jobs among the port-side operators this is having. Fourteen viable businesses have gone out of business at a time of recession, and we think this has been the result of an unfair process and a catalogue of errors by the Valuation Office Agency (VOA) and the government. As we come towards the general election we decided to make our position clear: we plan to place a moratorium on collection of the arrears.”

Handy Shipping Guide decided to take a closer look into the demise of one of the operator’s concerned, traditional timber and freight shippers Scotline Terminal Goole, an independent arm of the Scotline Group which runs similar operations at several other ports. We should firstly stress that only the Goole operation is affected by what follows.

This month Scotline Terminal Goole was put into liquidation after failing to meet a contentious business rates bill demanded by East Riding Council. Last week the same Council came under heavy fire in the press for plans to grant early retirement to their “Corporate Resources Director”, the wife of former council chief executive Darryl Stephenson, with a pay off of over £360,000. This, after two other senior Council employees have departed in similar circumstances in the past year with rumours that they too received huge payoffs.

The case we examined contains elements of the stories from other operators in a similar position. Scotline Goole faced a rates bill based on a Government Valuations Office Agency (VOA) estimate of rateable value of £257,000. Fair enough, you may say, everybody has to pay rates. Or do they? It seems the valuation put on Scotline’s property was for the 36,000 square metre Associated British Ports site, at which they handled timber from Scandinavia. Scotline declared they only used 16,000 square metres for which they were liable plus they were being charged for a common use wharf and for a shed they didn’t even own!

In an interview with the Handy Shipping Guide, Mr Peter Millatt, a Scotline Director, laid out the company’s case. He told how the situation for Scotline became untenable; on the 28th January 2009 they lodged an appeal with the VOA. Almost exactly a year later on the 20th January 2010 they received an answer confirming their arguments and a statement saying they would be liable for a considerable reduction. This turned out to be in the order of 83%. The VOA had apparently decided that Scotline’s landlord’s, Associated British Ports (ABP), would be liable for any outstanding balance. East Riding came back on the 8th February with a summons for Scotline in the sum of £200,000, part of a cumulative balance of over £600,000 (which was later revised to £701,000).

At this point, the 25th February this year, having spent tens of thousands of pounds as members of the Humber Rating Group, fighting the authorities since 2007, Scotline decided to call in liquidators Carter Clark and the ten staff on site were made redundant. On the 3rd March, in the light of the liquidation ABP invalidated their tenancy licence agreement with Scotline, Goole.

Confirmation of a reduced rates bill came to Scotline Goole on the 11th March with the final creditors meeting scheduled for the 15th, East Riding Council finally proposed a reduced debt of £115,000 against their previous £701,000 demand with an offer to stretch payment over eight years. ABP had terminated the tenancy however and, with no time for meaningful renegotiation, and with little will left to do so, Scotline Goole closed the doors for the last time.

Peter Millatt is discouraged by the situation the company was put in, seemingly by inefficiencies in the system as much as anything, but he has been buoyed up by the offers of assistance he has received from others in the freight and shipping community. The situation the company was put in, during a period when all businesses are under pressure, is one shared by many others. By liquidating the debt to East Riding will presumably be written off as they cannot sensibly redirect the balance to ABP and Scotline will have little or nothing left to pay them.

It would seem then that others in the same situation would be best to await the election results before coughing up outstanding port side business rates against which they are appealing, there might actually be some good news regarding their debts.

Photo: Scotline Goole Operating