Backdated tax bills threaten businesses in Southampton docks

The Treasury sub-committee said a Government agency was to blame for the situation, which has already forced some firms out of business and has seen Southampton companies landed with a backdated tax bill of £3.6m.

A new rates system came into force in 2005 but the Valuation Office Agency failed to assess properties in time or properly inform those affected, resulting in surprise backdated bills.

The committee dismissed a Government offer to allow payments to be spread over eight years as too little too late and suggested the new system should instead be delayed until 2010.

MPs from port cities, including former deputy Prime Minister John Prescott, who represents Hull, have been campaigning on behalf of local firms facing ruin.

“For some port businesses, the backdated charges come to millions of pounds. For example Freshney Cargo Ltd faces a £2.4m backdated charge against what used to be an annual payment of £48,142,” the report said.

“Numerous businesses have written to us to complain that they cannot afford to pay these charges and will be forced to cease trading.”

The Government’s spread payments offer, unveiled in the Pre- Budget Report, “comes too late for those firms which have already ceased to operate in the face of the huge rates bills presented,” it complained.

“It is probable that, even with an eight-year period to pay, the backdated and prospectively increased rates bills may make many firms technically insolvent.

“We recommend that, in recognition of the fact that the Valuation Office Agency is to blame for the situation, the Government takes steps to mitigate further the difficult position faced by port businesses.”

Southampton port boss Doug Morrison has previously branded the tax demand “ unfair”.

“We have got a great deal of sympathy for everyone asked to pay the backdated element,” he said.