Business rates surgery with CBRE Scotland

In this series of articles, CBRE Scotland answers questions on business rates '“ this week looks at the upcoming review of the rating system.

Former RBS Scotland chairman Ken Barclay will lead the review into the rating system. Picture: Contributed

Question: As the Scottish Government begins another review of the rating system, will this third review in the last four years finally deliver for business?

Brian Rogan: Prior to the Scottish parliamentary elections in May 2016, the First Minister announced the Scottish Government had appointed the former chair of RBS Scotland, Ken Barclay, to lead a review of business rates. The outcome of the report is due by summer 2017. Although we welcome the review, the timescale for reporting is unfortunate as it comes too late to affect the 2017 revaluation.

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The composition of the review panel lead by Mr Barclay was confirmed in July 2016 and is a highly experienced and talented team which includes Isobel d’Inverno of law firm Brodies, Professor Russel Griggs, former chairman of the Scottish Government’s regulatory review group, and Nora Senior, former president of the British Chambers of Commerce.

The panel’s brief is to identify and consider how business rates can support business growth, respond to wider economic conditions and changing marketplaces, and support long-term growth and investment. It is then to recommend appropriate changes to promote these aims.

The panel’s recommendations will be framed by the following principles: they should be revenue neutral overall and fair as this is not an exercise in increasing overall tax revenue; the small business bonus scheme will be retained until at least 2021; they should reflect the First Minister’s ambition that Scotland will be the best place to do business anywhere in the UK; and business rates will continue to be a property-based tax.

We will be contributing evidence to the review panel on how, in our opinion, the business rates system can be improved to meet the stated aims, however it is worth remembering that previous initiatives to reform the business rates system have not produced any significant changes to date. For example, despite 93 responses from stakeholders to the November 2012 rates consultation paper, Supporting Business: Promoting Growth, there were no subsequent changes to the business rates framework. Similarly there were 40 responses to the December 2014 non-domestic rate valuation appeal system consultation paper but no proposals have been made – let alone implemented – to improve the valuation appeal system.

The Scottish Government’s progress so far in improving the business rates system and making it fit for purpose in the 21st century has been underwhelming. However, we hope that the review panel will understand and recognise the need for the fundamental changes that ratepayers have been calling for over the last four years and that the Scottish Government will accept their recommendations and finally grasp the nettle.

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Business rates surgery with CBRE Scotland

• Brian Rogan is head of rating at CBRE Scotland