Business Rates Newsletter - November 2018

Introduction

Welcome to Graham Sibbald's Fifth Rating Newsletter providing an update on Rating appeals and financial changes affecting commercial ratepayers.

Business Rates (also known as Non-Domestic Rates) are a tax on non-domestic properties to help pay for local Council Services.

Each year the amount you pay in Business Rates will be increased by inflation. The current revaluation took place as from 1st April 2017 and the new rateable values will remain in effect until 31st March 2022 unless subject to modification under appeal.

Our Rating Services

• Initial meeting with client and appeal recommendations
• Checking rates invoices and full rates bill audit
• Full appeal process
• Advising on vacant property rates relief
• Advising on rating procedures and legislation
• Water and sewerage charges review

Appeal Opportunities

Apart from Revaluation Appeal there are other opportunities to lodge an appeal against an assessment as follows:

• If you have become a new proprietor, tenant or occupier.
• If you have carried out any physical alteration to your property which may have resulted in a new Valuation Notice being issued.
• If you consider your business as being adversely affected by external circumstances such as new business competition and/or physical or economic changes in your location.

There are limited timescales for appeals on the above and we can provide further information.

Chancellor’s Budget

 The Chancellor announced a £1.5bn boost to small High Street retailers in his budget. This includes £900bn in Business Rates relief for nearly 500,000 small businesses who must have a rateable value of £51,000 or less.

This relief does not apply to Scotland. Under the Barnet formula there will be increased funding to Scotland however as Business Rates are devolved it will be up to the Scottish Government to decide exactly how to spend the money.

The Scottish Government has always referred to the Barclay Review of the Scottish rating system as being the panacea to all the problems in the Scottish High Street’s, however the original criteria specified that although the Review was to identify how the system could be reformed, the overall level of funding was to be maintained in order to provide the services upon which business rely.

Rates Relief

The Scottish Government have introduced a large number of varied rates relief packages since the Revaluation was implemented as from 1 April 2017. This is to soften the effect of large rateable value increases.

This ‘ad hoc’ approach to the provision of rates relief, a significant outgoing for a ratepayer, does cause confusion and concern. The main questions we are asked is how long will the relief remain in place (Transitional Relief), will the percentage of relief be adjusted, if they carry out improvements etc. (Small Business Relief) will this relief be lost?

In particular, the Government announced Transitional Relief in the Revaluation year, 2017, but initially this was only for 1 year. The qualifying businesses; hotels, public houses, and restaurants were unsure if the full liability would take effect in subsequent years, which has only recently been confirmed.

The same scenario arose with Day Nursery Relief, 100%, as from 1 April 2018, but for a period of three years. Will full rates be payable from 1 April 2021?

New and Improved Property Relief is already obtaining a positive response, although again introduced as from 1 April 2018, for a period of 12 months. This provides 100% Relief for 1 year where expansion or refurbishment has occurred, or the construction of a new building (see link below).

Although these Relief schemes are welcome the ad hoc nature of their introduction and the unknown period of their implementation causes business difficulty in future planning. More certainty and the introduction of all schemes at the beginning of a Revaluation and full diary of their implementation would assist everyone.

Your local council will automatically apply some reliefs, but you might need to complete an application form for other reliefs.

You have to apply for the following discounts;

• Small Business Bonus Scheme
• Fresh Start
• Rural Rate Relief
• Charitable Rate Relief
• Disabled Persons Relief
• Enterprise Area Relief
• Renewable Energy Generation Relief
• Day Nursery Relief
• Transitional Relief
• District Heating Relief
• Business Growth Accelerator Relief

Some local councils provide an additional Hardship Relief if your business meets certain criteria. For more information or to discuss further, please find contact details for our team below.

Appeal Progress to Date

The negotiations on the new Rateable Values introduced as from 1st April 2017 are now well underway.

The various Scottish Assessors are listing properties for Valuation Appeal Committee Hearings, which enables ratepayers (or their agents) to discuss the basis of the new rateable values. Initial discussions have been on values of small shops, offices and industrials. The subjects which were adversely affected by the Revaluation were restaurants, cafes, public houses and hotels. Negotiations with private surveyors and the Assessor’s Association Valuation Scheme for Public Houses has been agreed to the benefit of many publicans. 

We have found that the Assessors are prepared to listen to a coherent case and relevant adjustments to value have been made. 

Recommendations from the Barclay Review, particularly with regard to the administration of the system have yet to be implemented in Scotland.

The repayment of overpaid rates in many cases, has taken an inordinate period of time, particularly where ratepayers obtain, Small Business Rates Relief. We are currently chasing repayments for clients.

Future Revaluations - 3 Yearly!

In the past, from experience, the fact that revaluations were regular at a 5 yearly period, the effect on rateable value was less extreme. Problems occurred when the Government decided to cancel revaluations in 1983 and 2015 with the period extended to 7 years. The large jump in value brought about by the 7 year revaluation leading up to April 2017 brought about a chorus of complaint. The result was a recommendation from the Barclay Review that revaluations be changed to 3 years. Having now discussed this with various Assessors’ offices and ratepayers, this proposal is firstly, likely, to be unworkable and, secondly, not supported by ratepayers. 

The preparation and implementation of a Rating Revaluation throughout the country is a huge administrative exercise. The Assessor is required to source and analyse evidence then prepare valuations of every commercial property in Scotland, and subsequently issue Notices and collate appeals, and then enter into negotiation. There is no doubt there will be some considerable challenges for both parties to overcome when the 3 yearly cycle is introduced but a challenge Graham Sibbald are in a position to meet!

It should also be borne in mind that the fact that revaluations occur on a more regular basis does not necessarily mean that the rates liability will be reduced as rateable value is only one part of the rates liability calculation. The Uniform Business Rate, which is the multiplier proposed by the Scottish Government is adjusted annually. The Government has always argued that a Revaluation is not implemented to increase revenue!

Tim Bunker

T: 0131 240 5307

M: 07803 896 935

E: [email protected]