The recent Scottish Budget and subsequent announcement extended business rates relief to the end of 2021/22 for some sectors, including newspapers, retail, hospitality, leisure and aviation. While this was a welcome move, it again raises the question of why the Scottish Government is failing to address the fundamental issue of a perfectly viable business rates system being delivered in a way that isn't fit for purpose.
Rather than public money being ploughed into relief packages, the current mechanisms available within the non-domestic rates system could be put to good use. But the Scottish Government has refused to make the moves that would benefit businesses, employees and the wider economy. The sectors where the relief is currently being targeted may have been the worst affected by the pandemic however there are other sectors who have suffered which these reliefs completely ignore.
The Assessors have the option, within the Scottish legislation, to pro-actively address MCCs, such as Coronavirus. The system has the ability to respond through appeals or by assessors making adjustments to reflect an MCC. This is currently taking too long to happen. To provide more relief the system should be able to react quickly, using the relevant legislative mechanisms and past case law that would allow them to do so.
And the delays caused by waiting for the Westminster Government to make announcements next month means businesses are not given any advance notice, to accommodate potential rates liability or relief that may apply. Businesses therefore have no option but to model their outgoings from April with 100% rates liability.
This situation will lead to more companies failing and jobs being lost, and when we finally emerge from the pandemic there will be fewer ratepayers to share the tax burden.
At a time when state intervention in the reform of the non-domestic rates system has been significant, the Scottish Government must ensure it can react to support businesses through times of unprecedented hardship brought about by events beyond their control. Mechanisms in the system should be used to help businesses return to normal and promote economic recovery when pandemic restrictions can be eased.
Almost a year ago, the Scottish Government reacted to the challenges posed to business by the pandemic by allowing relief to be available automatically, without the need for applications to be completed and processed. From 1 April 2021 the proposed extension requires businesses to apply for relief, rather than it being automatic. This implies that relief may not be as widely available as it was throughout 2020.
A constantly moving landscape and reactive nature of the relief being implemented, along with delays on information being made available, results in an arduous, complex and uncertain environment.
Time is running out. The Scottish rating system must be allowed, through MCCs, to reassess rateable values and issue revised bills, ahead of the new financial year. It is a process that would offer critically needed relief for businesses, without a lengthy application processes, but a long-term positive outcome for the wider economy.
Louise Daly is a director of Colliers and head of rating in Scotland