Non-domestic rates reform: analysis of responses to consultation on Barclay implementation

18. Barclay Review Recommendation 30 – Commercial activity on parks

18.1 Question 26 relates to Recommendation 30, "Commercial activity on current exempt parks and Local Authority (Council) land vested in recreation should pay the same level of rates as similar activity elsewhere so as to ensure fairness." Currently public parks and land vested by the Local Authority in recreational purposes are exempt from entry on the valuation roll and hence commercial activity taking place on these pay no rates. From 2020 the Scottish Government will remove this exemption, these will now be entered into the valuation roll and non-domestic rates will become payable on the property or land within the park undertaking commercial activity.

Question 26 – How should commercial activity on parks be defined?

18.2 There were 62 responses to Question 26. The largest respondent category was Local Authorities and Representative Bodies. The Independent Education Sector did not answer this question. A breakdown of respondent categories can be found in the table below.

Table 26: Respondents Categorised

18.3 Profit-raising and fee-charging were highlighted as key bases for defining commercial activity, however, it was recognised that not all fee-charging was intended to create profit. The Scottish Borders Council stated that "a key distinction lies in whether the activity and the asset are operated with the intention of generating a profit".

18.4 An alternative suggestion was made to use length of time and / or the number of activities that took place within a year (no indication was given whether this was calendar or financial). For example, the City of Edinburgh Council suggested that if the activity took place for more than a designated number of days per year (days to be agreed after further consultation) then it would become liable for non-domestic rates.

18.5 A number of Local Authorities, Representative Bodies and Other Sector held the view that non-profit organisations should automatically be exempt from the definition of commercial activity. Sportscotland argued that "there is a risk of unintended consequences if the definition of 'commercial activity' is too wide, encompassing charging for sports facilities located within parks […]. If charges for park-based sports facilities is included within the definition of 'commercial activity', this could lead to significantly increased costs to users or make facilities non-viable to operators, with a resultant decrease in physical activity".

18.6 Furthermore, Sporta commented that if the activity or asset "operate some commercial activities and reinvest any profit to support the delivery of their wider activities and charitable purpose", they should not be liable to non-domestic rates. This was supported by COSLA, who also argued that: "Council run facilities [should] not be classed as commercial activity as Councils are non-profit making organisations".

18.7 This was supported by COSLA, who also argued that "Council run facilities [s]would not be classed as commercial activity as Councils are non-profit making organisations".

18.8 A number of Assessors, Chartered Surveyors and the Rating Surveyors Association highlighted that the recommendation's objectives would be best achieved by reviewing the existing Section 19 of the Local Government (Financial Provisions etc.) (Scotland) Act 1963^[7] rather than implementing new policy.

18.9 A small number of Businesses and Representative Bodies, advocated for Local Authorities to have discretion over commercial activity.

18.10 Again, the issue of getting the definitions correct was highlighted by a number of respondents with calls for further consultation.