Greedy councils are hiring spies to snoop on struggling shopkeepers so they can make millions of pounds more in business rates.
Almost half of English councils are using a private business to sift through satellite images and secretly examine stores, a Daily Mail investigation has found.
If they are found to be underpaying rates, the council taxes them extra – and the company, Analyse Local, gets a cut of the cash.
The revelations will add to fears that small firms are being treated as cash cows by councils at a time when high streets face unprecedented threats.
Greedy councils are hiring spies to snoop on struggling shopkeepers so they can make millions of pounds more in business rates. Pictured: Angry restaurant owner Ian Eldridge
Labour MP John Mann, a member of the Treasury select committee, said: ‘Councils should be focusing their money and efforts on supporting businesses to thrive on the high streets, not spending on companies to snoop on local businesses.
‘The current systems of business rates is inadequate and unfair to brick-and-mortar businesses.’
Firms pay rates based on the estimated cost of renting their property – the so-called rateable value.
Analyse Local specialises in finding properties that are undervalued or have been missed off the ratings list altogether.
It charges councils a £6,000 annual fee to use its snooping software, and then takes a 10 per cent cut of any increase in the value estimates, according to documents seen by the Mail.
On its website, the business boasts that it has identified 6,036 shops, offices and factories undervalued by a total of more than £160 million – meaning it is likely to have pocketed a £16million cut. It has found another 4,893 premises undervalued by £90 million that are still going through the taxman’s assessment process.
Analyse Local closely guards its spy software, but screenshots used in sales pitches feature what looks like satellite footage of properties.
These aerial views would show if buildings have been extended or redeveloped, as this would increase their value and push up business rates.
The firm also appears to examine shop fronts and planning documents, and it can even identify internal changes such as new equipment or layouts.
On its website, the company claims: ‘Analyse Local is used by half of the local authorities in England to provide an accurate forecast of threats to rateable value.’
The company also highlights a string of glowing reviews from councils.
Former chief executive of Pizza Express Ian Eldridge (pictured) is among thousands of small business owners who claim to have been hit with crippling rate hikes
One officer from Basildon and Brentwood councils said: ‘Having reviewed each of the cases of missing rateable value identified by Analyse Local, I am certain that my team would never have found any of them.’
Another official from the London borough of Brent, said: ‘Analyse Local is able to provide detailed and extensive investigation into assessments in the council’s locality that goes beyond what the council can obtain themselves.
The Mail is campaigning to save the British high street amid a crisis which has seen 50,000 retail jobs lost this year alone, following more than 61,000 store closures in 2017.
The paper is calling for reform of business rates and parking charges, and a fair tax for internet titans such as Amazon which are ruthlessly out-competing bricks-and-mortar retailers.
Mike Cherry, chairman of the Federation of Small Businesses, said: ‘Councils should be competing to create the most pro-business, low-tax regime to attract more businesses.
‘It’s high time Government stepped in and solved this business rates crisis once and for all.’
The Analyse Local brand belongs to software company Inform CPI.
A spokesman denied charging councils up-front fees, adding: ‘We don’t target small businesses, we don’t target big business – we don’t target anybody. We’re completely neutral.’
‘I would rather pay the mafia’, says former Pizza Express boss amid fury over crippling rate hikes
The former chief executive of Pizza Express is among thousands of small business owners who claim to have been hit with crippling rate hikes.
Ian Eldridge left the chain in 2002 and now employs 30 people at his family-run restaurant Bartellas in Meopham, Kent.
But the businessman has spent years locked in a dispute over how much tax he should pay.
Gravesham Borough Council claims restaurant owner Ian Eldridge (pictured) is underpaying on his rates and owes it £34,000
Mr Eldridge claims his property is significantly overvalued and is appealing to get his costs cut.
He said he was paying £2,000 a month in rates and handing over any more would harm the business.
But Gravesham Borough Council claims the 59-year-old is underpaying and owes it £34,000.
It is taking him to magistrates’ court later this month in a bid to extract the money.
Mr Eldridge said: ‘I would rather have to pay the Mafia, because at least they would have lunch and dinner with me.
‘They’ve said that if I pay now I can get a refund later if I’m found to have been overcharged – but if a supplier charges me too much, I don’t give them the money and then ask for it back.
‘I’m happy to pay my fair share but no one seems to want to take responsibility for sorting this out.’
A spokesman for the council said: ‘Businesses can appeal against their rateable value to the Valuation Office Agency.
‘If they are successful in their appeal and the rateable value of their business is reduced, councils will refund in full the excess amount they have paid.
‘However, until decisions on any appeals have been determined, the law requires that ratepayers pay the sums billed based upon the current rateable value that has been assigned to them.’
The spokesman added: ‘If, as in this case, a ratepayer chooses not to pay the full amount of business rates due, then councils have a duty to take recovery action by obtaining a liability order in a magistrates’ court.’