Over the last five years Epping Forest Council has lost out on almost £5 million from from empty business tax reliefs.

However, the district’s business leaders insist the three-month relief system is “crucial” for encouraging new businesses.

When business units become empty, such as when they close or move, no business rates have to be paid to the local authority for three months.

Business rates are a tax on non-domestic properties based on a property's "rateable value", which is linked to rental value.

The aim of the tax relief is to allow for property investment and give landlords time to find a new occupant.

The system pits councils' interests - who want stable income - against the business community, experts say.

In Epping Forest, from 2014-19, the council has lost out on £4,726,546 to this tax relief on average losing 2.25 per cent of its annual business rates.

Over the same period, the council collected £174.3m in business rates.

In 2019/20, Epping Forest is forecast to lose out on a further £894,857.

Joanna Toloczko, of the Epping Forest Business Group, argued the three-month tax relief was necessary for a thriving business community.

She said: “The three-month relief is often absolutely crucial for new businesses who are setting up.

“If a new business had to pay the business rates in its setting up period, when it often doesn’t receive any income, it could well be the difference between the venture being viable or not.

"This is true whether buying a building or leasing it from the owner, as the leaseholder usually becomes instantly contractually liable for the business rates.

“I think the three-month business rate is eminently sensible. Ultimately, if new businesses aren’t helped they won’t be there to pay business rates in the long run.”

There are calls for urgent reform to the system following the closure of a number of high-profile high-street retailers.

A HM Treasury spokesperson said: “Empty property relief strikes a balance between incentivising property owners to put vacant properties to use, while not penalising those who lose a tenant at short notice.

“Whilst the rate of business rates collection varies between individual authorities, the local government finance system has been designed so that business rates income is redistributed across the country according to the needs of local areas.

“We will announce further details of the business rates review in due course.”

Cllr Richard Watts, chair of the Local Government Association’s resources board, added: “Business rates are an extremely important source of income for local government and with an overall funding gap of £8 billion by 2025, the Government must commit to moving forward with vital reforms, which include addressing business rates avoidance and the impact of reliefs, such as empty premises relief.”