Non-domestic rates reform: analysis of responses to consultation on Barclay implementation
Analysis of responses to our consultation on accepted recommendations requiring legislation that came out of the Barclay Review of non-domestic rates. The consultation ran from 25 June until 17 September 2018.
1. Executive Summary
Introduction
1.1. Over the period from July 2016 to August 2017, the Government commissioned Ken Barclay to lead an independent review on the non-domestic (business) rates system in Scotland. The Review's report was published in August 2017 and contained 30 recommendations, grouped under the following headings:
- measures to support economic growth;
- measures to improve ratepayer experience and administration of the system;
- measures to increase fairness and ensure a level playing field.
1.2. Several Barclay Review recommendations can be implemented administratively but others require the Government to bring forward legislation. On 14 December 2017 the Scottish Government published an implementation plan, including responses to all 30 recommendations. It also set up an Implementation Advisory Group which helped design a consultation on the implementation of the Barclay Review recommendations the Government accepted to consider.
1.3. The consultation was launched on 25th June and ran until the 17th September 2018 and sought views only on those recommendations which the Government's Implementation Plan identified as requiring primary legislation (Recommendations 1, 2, 5(b), 13, 16, 18, 19, 20, 21, 22, 24, 25, 26, 27 and 30).
1.4. The consultation consisted of 26 open questions. A total of 148 responses were received, 124 from organisations and 24 from individuals.
1.5. This report presents an analysis of the responses to this consultation. It is important to note that this only presents the views of those who chose to respond to this consultation.
1.6. The respondents were placed into eight categories; Businesses; Chartered Surveyors (Private Sector); Independent Education Sector; Individuals; Local Authority / Local Authority Association / Local Community; Other Public Sector and Third Sector; Private Sector Professional / Representative / Trade Body, and; Valuation Board / Assessors / Related Representative Organisation. Table 1 shows the breakdown of categories. Summary terms used to refer to each category are in parentheses and throughout the report the term Local Authority is used interchangeably with the term Council.
Total Breakdown of Respondent Categories
Respondent Category | Number of Responses |
---|---|
Businesses (Businesses) | 13 |
Chartered Surveyor (Private Sector) (Chartered Surveyors) | 5 |
Independent Education Sector (Independent Education Sector) | 17 |
Individual (Individuals) | 24 |
Local Authority / Local Authority Association / Local Community (Local Authorities) | 29 |
Other Public Sector and Third Sector (Other Sector) | 6 |
Private Sector Professional / Representative / Trade Body (Representative Bodies) | 47 |
Valuation Board / Assessor / Related Representative Organisation (Assessor) | 7 |
Total | 148 |
Recurring Themes
1.7. A recurring theme in the consultation responses was that proposed changes to non-domestic rates policy, and consequent legislation, needed to be clearer. Consistent calls throughout the responses highlighted the necessity for clarity in definitions, such as: "new build", "exceptional circumstances" and the timescales of procedures (e.g. appeals). Some responses called for further consultation after legislation had been drafted.
1.8. In addition, respondents referred to the necessity to maintain fairness across Scotland and the UK. These concerns were particularly prevalent in responses to the questions relating to the proposal to allow Councils to implement pilot schemes to levy additional rates supplements on certain ratepayers, and in responses to the questions relating to modifications to tax reliefs schemes.
1.9. A more detailed summary of responses to each of the questions covered by this analysis is presented in the table below.
Summary Analysis Table
Questions |
Views on Recommendation |
Main Arguments For and Against/ Further Comments |
---|---|---|
R1: Business Growth Accelerator (BGA) |
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Q1: What are your views on how the growth accelerator and new unoccupied build should be treated in legislation? |
The BGA is supported by all respondent groups |
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R2: Three yearly revaluations |
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Q2: Do you have any comments on three yearly revaluations? |
Generally positive |
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R5(b): Pilot scheme to increase rates out-of-town |
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Q3: From 2020 a small number of pilot Councils will have a new power to increase rates paid by out of town or predominantly online businesses. a) Do you agree or disagree with putting in place safeguards? b) Please explain your response to (a) including what the safeguards should be if you agree they are required. |
General support that safeguards would be needed Most popular safeguard was a statutory cap on the levy Lack of support from businesses and their representatives |
|
Q4: Do you have any comments on the criteria and process which should be used to assess the pilot scheme(s)? |
Main point raised: there should be quantifiable evidence of Levy impact on town centre e.g. audit trail |
Other criteria suggested:
It was emphasised that pilot administration must be consistent and transparent |
R13: Greater information gathering power for Assessors |
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Q5: What level(s) should this civil penalty be set at? |
The penalty should be set above administration costs |
|
Q6: How should the penalty be set? Should it be a fixed penalty or proportionate to / banded by rateable value? |
There was widespread support for a scaled penalty, although Businesses tended to prefer a fixed penalty and Chartered Surveyors had mixed views |
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Q7: Do you have any views on who is responsible for administering the penalty and the process for appeals against the penalty notice? |
Assessors should be responsible for administering the penalty Valuation Appeals Committees (VACs) should be responsible for appeals |
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Q8: Which organisations/ individuals should be required to supply necessary information to the Assessors where applicable? |
The main view was that ratepayers should be responsible for supplying information to the Assessor |
Other suggestions included:
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R16: Civil penalty for non-provision of information to Councils by Ratepayers |
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Q9: What level(s) should this penalty be set at? |
Needs to be large enough to act as an incentive to supply information |
|
Q10: How should the penalty be set? Should it be a fixed penalty or proportionate to / banded by rateable value? |
The main view was that the penalty should be proportionate to / banded by rateable value, however, a number of Representative Bodies, Businesses and Local Authorities advocated for a fixed penalty |
Other suggestions included:
|
Q11: Do you have any views on who is responsible for administering the penalty and the process for appeals against any penalty notice? |
The Local Authority should administer the penalty and the appeals |
|
Q12: Should this be a mandatory penalty or one that the Council has discretion over (please indicate your preference and add any comments)? |
The dominant view was that the penalty should be discretionary A small number of Local Authorities, Businesses, Chartered Surveyors and Individuals favoured a mandatory penalty |
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R18: Councils can initiate debt recovery at an earlier stage |
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Q13: How should the debt recovery changes be communicated to ratepayers? |
The Scottish Government should be responsible for communication |
Suggestions included via:
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Q14: What are your views on whether Councils should retain a discretion over debt recovery to allow for any extenuating circumstances? |
Councils should retain discretion to allow for extenuating circumstances |
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R19: Reform appeals system |
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Q15: How should this change be communicated to ratepayers? |
The Scottish Government should be responsible for communication |
Suggestions included via:
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Q16: Do you have any points about the change to allow valuation appeals to increase? |
General agreement that appeals should allow valuations to increase Most Chartered Surveyors (private sector) did not express an opinion |
Various implementation concerns were raised. These included:
A number of responses highlighted that Assessors already have the power to increase a valuation, where an error has come to light, under Section 2 of the Local Government (Scotland) Act 1975, however some noted the legislation may need revised to fully enable this proposal |
R20: General Anti-Avoidance Rule (GAAR) |
||
Q17: When the General Anti Avoidance Rule is introduced, do you have any recommendations or principles that this should encompass? |
General support for GAAR |
Recommendations and principles included:
Responses called for clarity over definitions and guidance on general rules |
Q21: Close empty property relief loophole |
||
Q18: How do we raise awareness of this change among ratepayers? |
The Scottish Government should be responsible for communication |
Suggestions included via:
Responses advocated for mixed methods of communication, not expressing preference of one over another |
Q19: Do you have any further comments around the 6-month reset period for empty property relief? |
There were mixed views towards the 6-month reset period. Local Authorities and Representative Bodies were in favour of the change; Chartered Surveyors and Businesses were opposed to the change |
A number of concerns were raised by those against the 6-month reset period. These included:
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R22: Close Small Business Bonus Scheme loophole (self-catering) |
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Q20: Should there be any local discretion in the application of this policy? |
There was no consensus on whether discretion should be applicable |
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Q21: If your answer to Question 20 is yes, under what circumstances should this discretion apply? |
Responses mentioned "extenuating" or "exceptional" circumstances as a criterion for local discretion, providing those circumstances are outwith the ratepayers' control. |
Respondents identified that "extenuating" and "exceptional" circumstances could include:
A number of issues were raised:
Further suggestions were:
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R24: Reform charity relief |
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Q22: How should independent schools with exceptional circumstances such as specialist music schools be treated?
|
Schools should not be treated differently if they are specialised, independent or state run, especially if they support children with additional needs |
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R25: Restrict relief to properties in active occupation |
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Q23: How should active occupation be defined? |
The three criteria suggested in the Barclay Implementation Consultation Paper were the most popular criteria for definition of active occupation:
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Additional criteria included:
Other points raised:
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R26: Reform empty property relief (listed buildings and surcharge) |
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Q24: What are your views on whether Councils should have discretion in the application of this measure for properties, so that local circumstances can be accounted for? |
General support for discretion |
Implementation concerns included:
Further suggestions included:
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R27: Sports relief for affordable community facilities |
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Q25: How should affordable / community sports facilities be defined? |
Suggestions from the Barclay Implementation Consultation Paper were met with general agreement These were:
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Concerns included:
Other suggestions included:
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R30: Commercial activity on parks |
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Q26: How should commercial activity on parks be defined? |
If the activity is profit raising or fee charging then it should be defined as commercial activity. However, a distinction was recognised between whether the activity charges a fee to cover costs or to raise a profit. If the fee was to cover costs then the activity should be defined as non-commercial. |
Other suggestion on how to define commercial activity:
Further comments:
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