John Swinney urged to give firms more time to appeal 'unfair' business rates

FINANCE minister John Swinney is under pressure to review the "arcane" and "unfair" system of calculating and appealing non-domestic business rates amid warnings that shock hikes will derail economic recovery.

Last week Scotland on Sunday reported that thousands of Scottish firms have been saddled with increases of as much as 400 per cent in their non-domestic rates (NDRs). In most cases NDRs are based on the rateable value of a company's premises.

Businesses have until September to appeal their bills, which are reviewed every five years. But enterprise groups warn that the "confusing" and "impenetrable" appeals system could lead to many firms missing the deadline. Chambers of Commerce around the country are pressing for the Scottish appeals process to be brought in line with the system south of the Border, where firms have five years - as opposed to five months - to contest.

They say changes to the appeals process are urgently needed, but over the longer term an overhaul of the entire NDR system is necessary to encourage private sector investment.

The Scottish Chambers of Commerce (SCC) commissioned a report from Colliers International on how to reform the appeals system, which was sent to the finance minister.

Graham Birse, deputy chief executive of the Edinburgh Chamber of Commerce, said: "NDRs are not simple to understand so we are simply asking for more time for businesses to prepare their case. Both the administration and system of collecting NDRs is arcane, impenetrable, unfair and confusing." He also called on the Scottish Parliament's economy committee to investigate the crisis.

Steven Winyard, managing director of Stobo Castle, has been forced to shed six jobs to meet a rates rise to 540,000 from 407,500. Winyard said hotels are being penalised for success because their rates are - unlike other firms - based on income. Therefore, the more successful a hotel, the more it has to pay. "The Scottish Government is never going to grow tourism unless this is addressed," Winyard said. "There's currently no incentive to grow turnover or invest in your business."

A Scottish Government spokesman said it would "consider the case for streamlining the valuation appeals process" and is awaiting further information from the SCC.

"Businesses in Scotland are benefiting from the most generous rates relief package in the UK - 2.4 billion over five years," the spokesman added.

Iain Smith, convener of the Scottish Parliament's Economy, Energy and Tourism Committee, said: "The Committee has heard concerns from a number of Scottish businesses about the impact of the rates revaluation. We have raised this with the Cabinet Secretary for Finance and Sustainable Growth and will continue to monitor the impact of rates increases on business."