Councils are calling for tougher laws to counter business rates avoidance after new research suggested it is costing local services £250 million a year.

Money is lost when firms go into insolvency while local authorities sometimes have problems establishing ownership of a property, said the Local Government Association (LGA).

Short-term periods of occupation, which leads to three months empty property exemption, is adding to the problem, said the LGA.

Councils need new legal powers to inspect non-domestic properties to verify information, said the LGA.

Spokesman Richard Watts said: “Business rates are an extremely important source of income for councils and the local services our communities rely on every day.

“Too many businesses are exploiting loopholes and manipulating the system to avoid paying the tax they owe.

“The scale of business rates avoidance shows more needs to be done to tackle this behaviour and reduce avoidance.

“Every penny lost through business rates avoidance is money that could be spent on adult social care, children’s services, fixing roads and other vital community services.”

Alan Jones is PA Industrial Correspondent.