A South London council has written off £65,000 in rent owed by a restaurant that ran an illegal nightclub.

Lewisham Council cancelled the debt owed by a restaurant that hosted a nightclub in its basement at a meeting on June 15. 

The restaurant racked up thousands of pounds in rent arrears over the 20 years it leased a property on Evelyn Street in Deptford from the local authority.

Lewisham eventually seized the building from the business in September 2016 due to its unpaid debts and misuse of the premises. 

The five-figure sum was one of 15 debts worth more than £50,000 that the council cancelled at the cabinet meeting.

Just under £42 million in debt was written off in total: almost £29 million in uncollected council tax, £10.5 million in overpaid housing benefits, £2 million in unspecified debts and £528,000 in unpaid business rates. 

Council documents say that the housing benefit overpayments, unpaid council tax and uncollected business rates were all over six years old.

Lewisham Council is owed £126 million in debt as of March 31. 

A council report about uncollected debt from June 15 says the restaurant failed to pay £65,000 in rent.

It reads: “236 Evelyn Street was leased for 20 years from 13/02/1997 at £8,300 pa [per annum].

"The same tenant also held a lease for 238 Evelyn Street.

"It traded as a restaurant although the basement was used, without consent, as a nightclub.

"The property was repossessed on the 06/09/2016 due to the breach of covenant (unlawful use) and significant rent arrears.”

The report says that Lewisham has £93.1 million set aside to cover debts over one year old.

It reads: “At 31 March 2022 the Council had debts owing of £126.1m, with the £93.1m provision available to cover those debts over one year old should they be deemed uncollectable or uneconomic to collect.

“The council works hard to collect the monies owed to it for services provided and, where individuals may be struggling to pay, engages early and often over extended periods to work with customers to assist them to pay.

"Only as a last resort will the council use enforcement and court action to collect monies owed to it.”

A Lewisham Council spokesperson said: “Lewisham Council routinely sets aside funding in the accounts for uncollectible debt consistent with the policies audited by the external auditors.

"The Council has a corporate approach to the writing off of bad and irrecoverable debts and will always try to maximise the opportunity for collection thereby minimising the need for write off. 

“However, like most local authorities, it is not always possible to recover all debts owed, for example, some businesses stop trading or individuals leave the Borough and cannot be traced.

"We take all reasonable steps to recover a debt before considering write off.

"Writing off this kind of debt means we can now focus on potentially recoverable debt and it allows resources to be concentrated where they are most productive.”

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