Radical changes to the way in which business rates are charged at UK ports have claimed the first of many anticipated casualties.
Paper and pulp distribution specialists, Fortress Warehousing & Distribution Ltd, formerly the UK arm of the international Westerlund Group based at Tilbury Docks, has sunk into receivership after being landed with an unexpected bill for £2.4 million.
In the past business rates have been paid by the various port authorities and re-charged to occupiers through annual port dues, but changes only now being enforced by the Government Valuation Office, are being backdated to 1st April 2005.
The changes affect all 58 UK ports and hundreds of businesses are facing additional payments of £millions since the introduction of the new rating system. This latest financial attack on the commercial property sector follows the government's empty property tax introduced in April 2008.
"The decision to enforce this new rating system during the current economic climate, is now sending a shock wave of destruction through the commercial property's shipping sector", warns John Webber, joint head of Accurates - the specialist rating division of Colliers CRE in Birmingham.
"The valuation office has been aware of the devastating implications the new system would cause, and could not have chosen a more inappropriate time to enforce the changes. To give smaller port based businesses a chance of survival they could actually have introduced the changes back in 2005 or at least waited until 2010 when business rates are reviewed as part of the next revaluation exercise.
"The government is clearly targeting the commercial property sector and the devastating blow this has had on Fortress Warehousing & Distribution is just the tip of the iceberg."
Reflecting on how the system will affect other areas, John Webber added: "The knock from this new rating system will also fuel the country's recession harder and faster, inflating the price of goods coming into ports."
So far the changes have been implemented in only a few ports across the country, including Tilbury, Hull and Southampton.
For more information contact our press office:
Natasha Sunderland Head of PR +44 20 7344 6641
Jacqueline Whitaker Associate Director +44 20 7344 6706