Winnipeg limo company gets time to come up with plan to pay back $145K tax bill

Posted on September 16, 2024 by Peggy

A Winnipeg limo company facing an order to shut down over unpaid taxes has bought itself some time to figure out a plan to pay back the money.

London Limos owes the City of Winnipeg nearly $144,824 in business taxes and penalties dating back to 2018. That amount includes approximately $98,000 in penalties for not paying taxes.

The city ordered it to cease operations until it pays up, but the finance committee heard an appeal from owner Hardev Singh Sandhu on Monday. It granted an extension of 60 days for the company to come up with an acceptable plan to pay back the money.

Sandhu says the city incorrectly assessed the size of his business in 2018. His tax payments went up from $220 a month, to $2,700.

“All of a sudden it went to $2,700. How a small business can handle that kind of stress?” Sandhu told the committee.

Sandhu says he repeatedly tried to get city officials to come and inspect his business, which he says shared space with three other businesses.

In 2022, a city inspector reassessed the square footage that London Limos occupies at its 1595 Erin St. location from 10,000 square feet (929 square metres) to less than 1,000 (93 square metres). That lowered his tax payments to $600 a month.

“I can prove that there is a lot of things the city could have done for me to save the business. And we are not here today discussing that.”

The committee said it can’t change the amount Sandhu owes. Tax reassessments can only go back as far as the previous year.

Department officials say Sandhu should have appealed his assessment to the board of revision years ago.

‘Last resort’

Sandhu says he was never told he should have pleaded his case to the board of revision, which handles disputes over tax assessments. The department says it sent reminders every year to London Limos advising them what they owed, and suggesting avenues of recourse, including the board of revision.

Coun. Janice Lukes, who sits on the committee, asked the department why it allowed the process to go on for six years.

Tim Austin, city assessor with the taxation department, said collecting taxes is “not a simple thing” at times, and the department will repeat the process of sending notices in an effort to collect.

Austin said this is only the second time the city has ordered a business to cease operations over unpaid taxes, and the first time such an order has been appealed.

The city has limited options when it comes to collecting business taxes. With property taxes, the city can take possession of a property if the owner has not paid, but with businesses, they are limited to the assets which the business owns directly.

In the case of London Limos, the building it occupies is owned by a different numbered company than the one that is registered as the owner of the limo company, even though they share some of the same directors.

London Limos was determined to possess insufficient assets to cover the debt, because the vehicles it operates are leased, Austin said. The only other option the city has, in that case, is to order the company to cease operations.

Finance committee chair Coun. Jeff Browaty said ordering the business to cease operations is a “last resort.” During the COVID-19 pandemic, the city also gave businesses more time to pay back debts.

“It’s just a good reminder, like if, if there’s a question or a problem with your assessment, whether it’s property or business assessment, you do need to reach out to the city. Letting it stretch out for six years. It really just you really get slammed by the the fees.”

In June, Sandhu offered to make payments of $500 per month, but a report from the city’s assessment and taxation department called that insufficient.

Sandhu was told he would have to pay a $20,000 down payment, with monthly payments of $6,400.

If London Limos doesn’t does not come up with a plan to pay back the full amount it owes, the city will order it to shut down.