Failure to listen creates damaging rates regime: comment
Scottish businesses have been left to rue what could have been after a Non-Domestic Rates (Scotland) Bill was passed through Holyrood, which gives with one hand and takes away with the other.
Adding to the uncertainty is the Scottish Government’s failure to address business rates as part of its £320 million Covid-19 support package.
The one-year rate reliefs will have limited impact on business with property over a certain value, in an affected sector without targeted reliefs applied or faces longer-term issues. It is a package that does little more than “tinkering” with the system.
The Scottish Government’s refusal to listen to reasoned arguments on other aspects of the new legislation, which comes into effect in April, has caused dismay in the business community.
At the same time, the Scottish Government has strengthened its own powers, giving ministers powers to introduce general anti-avoidance regulations; adjust exempt status of lands and heritages through secondary legislation; and to prescribe the amount of non-domestic rate relief in relation to its net zero emissions targets.
While the bill had been seen as a chance to create a more fair and flexible system that would not leave businesses or property owners paying rates based on unrealistic historical valuations, some aspects of the new law will actually make it harder for those who – individually or collectively – fall on hard times.
The changes in respect of “material change of circumstances” (MCCs) has created a system that is unable to react quickly to a changing business environment.
It is particularly disappointing that amendments put forward on this matter, which would have protected ratepayers’ appeal rights in respect of MCCs, were rejected by the government without a balanced view being sought, or any consultation being undertaken as to the possible impact of this change.
Indeed, it was based on factually incorrect information: the government simply did not engage or listen to business on this matter and has been misinformed by the Scottish Assessors Association, apparently taking it as read that the views expressed to them in a letter were factually correct and a fair representation of the view of the profession in general, which it is not.
As a result, we have been burdened with a system that has become more rigid and less able to react as a result of these changes – and businesses will be stuck with unrealistically high rates, at the time they are least able to afford them.
Similarly, moving towards a two-stage appeal system with separate proposals and appeals is a significant change and, at present, there is no detail available as to any potential variation of timescales relating to appeals and disposal dates. It is a concern that this is a possible indication that Scotland is looking to progress more in line with England.
Additionally, there is the issue of the powers of the assessor to request information. These powers are simply too wide-ranging and the high fines are punitive, putting owners and businesses at a disadvantage.
The information that assessors can request is not restricted to being requested from parties with a legal interest in the property, but also includes third parties whom the assessor thinks might have that information. The wording in this section is that the assessors can seek information that is “reasonably required,” yet there is no test of the assessor having to act “reasonably” in this regard.
The government says there will be instances where it will be reasonable to seek information from a third party – but there are so many instances where it is not. This provision is now left open to abuse as a punitive additional revenue generator.
What’s more, the fines associated with this are cumulative and completely disproportionate, and any appeals against the penalties for not complying with a return of information request are to be dealt with by the valuation appeal committees. It is, in any case, inappropriate for the valuation appeal committees to deal with this matter, and the opinion of the chairs and members of these panels were not sought prior to passing this provision.
The Non-Domestic Rates (Scotland) Act comes into force at a time of unprecedented uncertainty and the Scottish Government’s failure to address the MCC clause is likely to see otherwise viable businesses go under. While a broader programme of financial support must continue during the ongoing crisis, the government must act now, to revoke section 8B of the Act, before this damaging measure comes into effect.