Fears of 'severe' impact on firms from lack of rate clarity

The Scottish Government’s postponement of non-domestic rates revaluation will “push more businesses over the edge” – and could see them take drastic steps such as closing branches and cutting jobs to prepare for higher costs, property experts are warning.

Businesses need to know what their liability will be, says Colliers (file image). Picture: SNS Group.

Property adviser Colliers International noted that the delay, by a year to April 2023, was announced on Tuesday, aligning Scotland with the postponement announced for England and Wales in July by the Westminster government. Colliers added that these are unprecedented times and the consequences of no action at this point will be “severe”.

The firm said it fears the postponement will put more pressure on businesses already facing a backlog of appeals, including the thousands related to material change of circumstances (MCC) as a result of Covid-19.

Colliers said there are more than 50,000 additional MCC Covid-19 appeals – “pushing the system towards breaking point”. Louise Daly, associate director, who leads Colliers’ rating team in Scotland, said: “Thousands of Scottish businesses are being left in limbo, urgently looking for clarity. Ratepayers cannot wait for another revaluation to happen in 2023.

“Businesses need to know what their liability will be, or they could be forced into making ruthless decisions, such as branch closures and job cuts, in preparation for the increased costs they will face.

“With business rates relief in the worst-affected sectors, such as retail and hospitality and leisure, currently set to be removed in seven months’ time, liability will increase from 0 per cent to 100 per cent overnight. Assessors must take action now to deal with the biggest, most significant MCC likely to occur in our lifetime.”

However, Colliers has welcomed the Scottish Government’s decision to base the 2023 business rate revaluation on rents at 1 April 2022 and not 1 April 2021, as is happening in England and Wales.

Clearer

John Webber, head of rating at Colliers, said: “What is happening in Scotland will represent a far clearer picture of the market than England and Wales will experience.”

Meanwhile, more than 70 airport businesses based at Heathrow have brought a group action against the UK tax authorities in a bid to secure business rates reductions and are expected to discuss a settlement next week.

In England and Wales, businesses providing handling services at airports are liable for full rates while counterparts in Scotland have been handed a 100 per cent rates holiday.

SCOTSMAN.COM

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