Taxpayers in West Norfolk could be handed a multi-million pound tax rebate bill if a power company wins its ongoing legal fight, it has emerged.
The warning relates to a dispute over the amount paid in business rates on the Centrica power station in Peterborough, and could have major implications for its site on the edge of Lynn as well.
West Norfolk Council officials have warned that, if it wins the case, the energy giant could be refunded almost 10 years’ worth of business rates, around £6 million, on the Saddlebow site.
Of that, the borough council would only end up paying the first £365,000, with the remainder of the bill being met by central government.
Plans to hold a contingency fund to meet that cost, if it is needed, were approved by the authority’s cabinet at a meeting on Wednesday.
But the report warned there may be short-term financial problems until the government reimburses the council for the rest of the money.
The document said: “The council may have to incur the temporary cashflow costs of having to refund Centrica PLC.”
And council leader Nick Daubney admitted: “It’s very serious, but all we can do is make the provision at this stage.”
Centrica is currently facing a High Court challenge, which is due to be heard this autumn, after it successfully argued that the assessment of how much its Peterborough site could be let for on the open market, known as its rateable value, and which is used to set business rate levels, should be slashed to £1.
It is thought that a ruling will not be delivered until next year.
Officers’ report to the cabinet said that, if that ruling is upheld, it would reduce the equivalent figure for the firm’s Lynn site by more than £1.2 million in the last financial year alone.
And they said it would cost just over £6 million to refund the company all the rate money it had paid on the Lynn site since 2005, the last date at which its value was assessed.
Rates appeals can be backdated to the last date that the site was valued.
Although local authorities are normally liable for 40 per cent of those sums, the equivalent of around £2.4 million in the Lynn case, the government would pay more in this case, as the amount required would take the council below the government-set minimum funding level for business rates collection.