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Firms 'owe £1.2bn business rates'

Councils in England are owed £1.2 billion in unpaid business rates, the local government spending watchdog has found.

The Audit Commission said that in 2012-13 alone, £513 million of the £22.4 billion owed was not collected in the year it was due.

It represented an in-year shortfall of 2.3%, with metropolitan district councils the biggest losers with an average of 3.3% of rates due going uncollected.

The commission said the failure by councils to collect all the rates owed meant that significant sums were not available for local services.

"Despite the high rates of in-year collection, business rates arrears are substantial over time and currently stand at £1.2 billion," the commission said in its report.

"This is money that, if collected in-year, would be available to the public purse sooner to support the delivery of services."

Commission chairman Jeremy Newman said: "We acknowledge that some councils are doing exceptionally well in collecting business rates, but due to the amounts involved, a modest-sounding 2.3% of uncollected in-year business rates equates to £513 million."

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