Iain McGhee: Business rate debate continues to rage

Edinburgh Castle is facing a dramatic rise in business rates, says Iain McGhee of Knight Frank. Picture: Ian Georgeson
Edinburgh Castle is facing a dramatic rise in business rates, says Iain McGhee of Knight Frank. Picture: Ian Georgeson
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Business rates have rarely, if ever, received so much attention across mainstream media as in recent weeks.

Since the turn of the year there have been numerous articles about the forthcoming revaluation and its potential implications for ratepayers across the country.

There is a great deal of detail still to come on how business rates will take shape

Before Christmas, I wrote that it would be one of the most contentious revaluations of recent times, and it’s fair to say that this prediction has come to pass – although no-one could claim to have foreseen how much of a political hot potato this issue would become.

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Following much debate, the Scottish Government has announced a cap of 12.5 per cent on rises for the hospitality sector. While it is said the move will help 8,500 hotels, pubs, restaurants and cafes, semantics could play a big role: where exactly does the hospitality sector end, and the leisure and tourism sectors begin?

On the face of it, a cap for one segment of the economy, likely to be affected more than most, sounds like a positive move. However, in practical terms, there are some serious issues – not least the ambiguity over the definition of different sectors.

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Take, for example, one of Scotland’s most iconic buildings, Edinburgh Castle. It faces a rise of 450 per cent to £1.8 million, which could have serious implications. The attraction, to all intents and purposes, could feasibly be considered part of the hospitality sector and a vast number of businesses directly rely on it for trade. It needs to be recognised that the hospitality, leisure and tourism markets are inextricably linked, particularly in Scotland’s cities.

The same is true when it comes to the 12.5 per cent cap announced this week on rates rises for offices in Aberdeen and the city’s surrounds. No-one would dispute that the North-east has gone through a particularly challenging time in the wake of the oil price drop – but it hasn’t only affected the 1,000 or so offices that will be helped by the transitional relief. There is an argument for extending this relief to industrial properties, which have also seen sizeable rises in their annual rates burden against the same economic backdrop.

Amid all the recent headlines, claims and counter-claims, it can be difficult to retain a focus on the facts and take a step back. Businesses need to obtain the right advice to make sure the appropriate steps are taken – that could mean lodging an appeal against their revised rateable value, which is the basis for the rates paid.

There is a great deal of detail still to come on how business rates will take shape after April. No doubt that will continue to generate headlines in the weeks ahead. Nevertheless, organisations of all shapes and sizes should keep an eye on any changes emerging – if Edinburgh Castle demonstrates anything, it’s that ignoring the issue could prove very costly.

• Iain McGhee is valuation and rating partner at property consultant Knight Frank

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