Business Rates Bill still leaves issues to be addressed – Liz Cameron in the Courier
Following a review of the non-domestic rates system by former RBS chief Ken Barclay last year, the Scottish Government has published the Non-Domestic Rates (Scotland) Bill which takes on a number of his suggestions.
The key change will see business rates retested every three years as opposed to every five. Non-domestic rates (NDRs) are a tax based on the value of a company’s premises. The most recent revaluation came into effect on April 1st 2017 – seven years after the previous revaluation. A new tax bill is never a welcome sight, but for some businesses the length of time between the revaluations meant that the 2017 revaluation assessments contained huge uplifts from the 2010 levels which came as a nasty surprise.
More regular revaluations should help limit these shocks. However there are still many issues that haven’t been addressed in the new bill such as ‘material change of circumstances’ appeals which are more restrictive in Scotland than south of the border.
There are also added costs to the reforms. The bill proposes penalty revenues and the removal of relief from sectors such as fee-paying schools. The rector of the High School of Dundee reacted with dismay when the Scottish Government revealed it would raise £37 million from the sector over the next five years. Meanwhile, SCC has called for assurances that any penalties introduced are matched with a commitment to provide ratepayers with significantly enhanced transparency and information around their own rateable values.
SCC welcomes the bill’s “Business Growth Accelerator” meant to encourage development, as it allows a 12-month delay before rates are increased when an existing property is expanded or improved and also before rates apply to a new build property.
There are over 230,000 properties – including shops, offices, factories, even quarries – on which rates are payable in Scotland. Over 100,000 small business premises are exempt due to the Small Business Bonus Scheme (SBBS). The tax raised £2.8billion last year, collected by local authorities, put into a shared Scottish pot then redistributed back to councils based on population and need.
The next revaluation takes place in 2022. However, SCC has argued that this should be brought forward to align with England and Wales in 2021.
Not only would this be the fairest option for firms by ensuring that values reflect current economic circumstances, but by the Bill’s own financial memorandum it could also reduce the cost of reform. Assessors indicate that moving the revaluation process out of sync with its comparative UK equivalents will affect information sharing and add to the overall expense.
Reform is absolutely necessary, but it’s critical to accelerate this where we can. Where there’s an opportunity to do so while saving money and reducing the administrative burden for both the taxpayer and hard-pressed firms, we’d urge the Scottish Government to work in partnership with the private sector and the independent assessors to deliver it.
