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

5. Barclay Review Recommendation 2 – Three-yearly revaluations

5.1 Question Two relates to the Barclay Review's second recommendation, "There should be three-yearly revaluations from 2022 with valuations based on market conditions on a date one year prior (the 'Tone date')." The Review made this recommendation with the view that a three year revaluation cycle, rather than the previous five year cycle, would better reflect changes that occur over time. It suggested the new cycle commence in 2022, with a two year tone date of 2020, moving to a one year tone date in 2025. It also noted that this system reform would rely heavily on reform to the appeals system and timetable.

Question 2 – Do you have any comments on three-yearly revaluations?

5.2 There were 98 responses to Question 2, with the largest respondent categories being Representative Bodies, Local Authorities and Businesses. No respondents from the Other Sector category answered this question. A detailed breakdown by respondent type can be found in the table below.

Table 2: Respondents Categorised

5.3 The move to three-year revaluations was met with general enthusiasm and the consensus was that moving to a three year system and a one year tone date meant that non-domestic rates paid would more accurately reflect market conditions.

5.4 Some respondents commented that they thought that the three year system could potentially reduce the amount of appeals brought forward on the basis of a 'Material Change of Circumstances'.

5.5 A small number of responses were not in favour of the move to three year evaluations, these were not confined to a specific respondent type.

5.6 Concerns were raised across all groups (whether for or against the proposal) over the appeals system for revaluations which would have to run alongside the three year revaluation system. Therefore, without any further change to the system, the perception was that the existing revaluation appeals timetable would be reduced by two years. The concerns raised related to the ambiguity reported by consultees of the proposed amendments to the appeals process and reduction of the appeals timetable. The concerns included, reviewing time limits for disposals of appeals and time limits for lodging appeal. CBRE Ltd stated that "shortening of the revaluation cycle from 5 to 3 years will require a significant redesign and overhaul of the "appeal" architecture, particularly the "appeal" provisions in the 1975 Act and the "appeal timetable" specified in the Valuation Timetable (Order) 1995 (the 1995 Order)."

5.7 Assessors highlighted concern surrounding the potential increase in their workload, both with the move to a three year evaluation and the perceived appeals timetable change. Hence, there was a call for an increase in resources, both information and communications technology (ICT) and personnel to help with the timetable change. Furthermore, COSLA highlighted "significant and operational implications for local government" if the move to three yearly valuations was to go ahead. COSLA emphasised its belief that "all new policies introduced by the Scottish Government [should be] fully funded."

5.8 The new timetable has the next revaluation scheduled for 2022, compared to 2021 in England and Wales^[2]. Due to this misalignment, concerns were raised by Assessors, that the 2022 timescale may put Scotland at a disadvantage. It was noted that the different revaluation schedules may reduce UK-wide harmonisation of valuation practices; information sharing may become more complex (albeit it was not specified as to exactly why this would be nor the types of parties involved). Furthermore, for businesses working across the UK, the difference in revaluation dates may make the UK market as a whole difficult to navigate.

5.9 A small number of concerns were raised by Businesses as to the rental market working on a five year timescale which would be out of sync with the proposed three-yearly revaluations. Alongside this, the Scottish Borders Council indicated the "key rationale for 3 yearly revaluations is greater ratepayer confidence in rateable values, this moves away from the greater stability and predictability for Council's budgeting requirements offered by the longer 5 year cycle."