DEBTS of more than £262,000 are to be wiped out by Colchester Council.

A total of £262,253 of unpaid business rates and housing benefit will be written off after the council exhausted ways of getting back the cash from businesses and residents.

The amount of unpaid business rates being written off is £227,189.

Of that, about £100,000 is money owed by Vergo, which went into administration in May last year leaving rates owed at its three Colchester stores.

Nearly £70,000 relates to businesses suspected of not paying rates that went into liquidation before the council could recover the money.

Paul Smith, councillor responsible for finance, said: “We have pursued them, but the companies are all in liquidation with no assets to distribute. They know the rules.

“We have to assess them, they appeal the assessment, we send out a notice, they have a month to wait before we start legal proceedings and just as it gets to court, the companies vanish and we have to write off the debt.

“They can go through the process again and again and there is very little we can do.

“There are businesses now operating in the town who have shut down and reopened again under the same name, but a different company.”

The remaining £50,000 relates to businesses which paid most of their rates, but finally went under.

Mr Smith said: “I think we have to accept some small firms may struggle and we are not as aggressive in chasing up rates for firms which have had a record of making regular payments in the past, in the hope they will recover.”

He added: “Our record in collecting business rates is one of the best in the country and it is well within the guidelines for the amount the Government say we should recover.

“That is not to say I’m complacent. It is all taxpayers’ money and there are a list of deserving causes which would benefit if all businesses paid their way.”

A further £21,080 in overpaid housing benefit has also been written off, as well as £14,000 owed by a woman, who sub-let her council house to a tenant, who then gutted it.

A Taxpayers’ Alliance spokes-man said: “It’s frustrating for taxpayers to see others having unpaid rates written off. Everyone should pay their fair share.” l Business rates are collected by councils on behalf of the Government. The money is then shared out among councils according to population size.