Companies exploiting tax relief loopholes are a 'plague', Ipswich councillor says after £545,000 written off

Companies exploiting legal loopholes for tax relief are a 'plague' on councils, a councillor has said after £545,000 was written off.

Cllr Martin Cook, Ipswich's lead for resources, presented other executive members with a quarterly update on the council's books last night.

He said: “It’s with a heavy heart that we have to put these forward as a write-off.”

His report included several debt write-offs totalling £708,361, the vast majority due to companies exploiting legal loopholes to get business rate reliefs, at £545,000.

Cllr Cook said such companies were a 'plague on councils up and down the land' but which were largely outside the council's powers.

One such company, 3rd Sector Assist Limited, which was a registered charity, was liable for business rates within several floors at St Vincent House, in Cutler Street, and the first floor of Hyde House, in Crown Street between 2019 and 2020.

The report said the charity's aim was to receive a full exemption through the rates mitigation scheme, racking up an outstanding balance of £238,087 before Bolton Council undertook insolvency action in November.

It now appears on Companies House as in liquidation.

Cllr Bryony Rudkin, the council's deputy leader, said it was aggravating and depressing to see how many people 'don't play by the rules'.

The second company councillors were told about was Space To Help (Ipswich), which the report stated appeared to only have been set up for the relief scheme.

The company was liable for a total £336,009 for several floors in St Vincent House, car spaces outside, and St Clare House, in Princes Road.

The report stated several companies, all listed as having the same director, had under £1,000 in assets listed — the company is still listed as being active on Companies House.

Cllr Cook explained it was hard for the council to do anything about it as the legal costs were often too high to pursue legal action and, even if successful, it would be unlikely the council could get the money back.

He said: “If the circumstances change for any of these companies and it was believed that it would be possible to recover the money, that will be pursued for the council.”

Ipswich's share of the total write-off amount is 40 per cent, with the remaining shared between Suffolk County Council (10 per cent) and the Government (50 per cent).