A mixed bag in the Scottish business rates Revaluation
Andrew Shaw is a chartered surveyor and RICS registered valuer in the commercial department of the Edinburgh office of DM Hall chartered surveyors.
Few events exercise the emotions of the commercial community in Scotland more than the periodic revaluations undertaken to determine the level of business rates, and this year is no exception.
The mainstream press has, perhaps understandably, highlighted the most dramatic increases in valuations, and business organisations such as the Scottish Retail Consortium have warned of “deep unease” while others have talked of potential bankruptcies and record numbers of appeals.
The new rateable values come into effect on 1st April this year. Revaluations usually take place every five years, and the last was in 2010, but the Scottish government postponed the Revaluation for two years to bring its process into line with England and Wales.
The upshot of this was that the “Tone Date” for this year’s revaluation was April 1, 2015, at a time when the full effects of the slump in the oil industry had still to be felt in the property market, particularly in the North East.
Other factors play a part, too. For shops, offices and industrial subjects, valuations are based on rentals and the Assessors would appear to have, in general, reflected whether these have fallen or risen, and valued accordingly.
However, licensed subjects including hotels are valued on turnover. Since we are in a wholly different economic environment from the previous tone date of 1 April 2008, these figures have often risen sharply and there is industry talk of average rises in proposed rateable values of 39%, with the Assessors applying increased percentages to Hotel turnover, raising the question of how justifiable the rises are.
The Barclay Review is currently looking at the situation with regards to numerous issues relating to Non-Domestic Rates in Scotland, with input from various business sectors and stakeholders, albeit the report will not be finalised until the 2017 Revaluation has already taken effect.
Smaller businesses have come out of the Revaluation relatively unscathed, with the Small Business Bonus Scheme threshold for full relief being increased from £10,000 to a proposed level of £15,000 meaning that many will pay no business rates at all and others will receive discounts.
The opportunity to challenge the new rateable values through the appeals process is limited in Scotland to the six months after the revaluation, so all appeals will have to be lodged by September 30th this year.
At DM Hall, we have already been analysing the proposed Rateable Values of many cases, across a wide range of property types, to determine if valuations are reasonable and advising clients about corrective measures if they are not.
The window for appeals, however, is tight and businesses which suspect their new valuations may be unreasonable should give serious thought to taking action timeously.