Non-Domestic Rates (Coronavirus) (Scotland) Bill: partial business and regulatory impact assessment - partial

Scottish Firms Impact Test

As at 1 June 2021, 259,010 properties were listed on the valuation roll. Of these, 6,586 were zero rated (and will not therefore pay non-domestic rates).

Since the start of the pandemic, the Scottish Government has provided more than £4.4 billion in business support to help mitigate the economic impact of COVID-19. A summary of this support is available at Coronavirus (COVID-19): summary of Scottish business support funding - gov.scot (www.gov.scot).

The Scottish Government offers a generous non-domestic rates relief package, including a 1.6% universal relief in 2020-21 to reverse the annual poundage increase and 100% relief for retail, hospitality, leisure and aviation for 2020-21 and 2021-22.

The Scottish Budget 2022-23 was published on 9 December 2021 and announced a 50% relief for properties in the retail, hospitality and leisure sectors for the first three months of 2022-23, capped at £27,500 per ratepayer.

Of the properties on the valuation roll at June 2020 which were not zero rated, 70% (174,725) were in receipt of 100% relief as a result of which they do not pay non-domestic rates. See tables 4a and 4b below.

[1] Excluding the 1.6% universal relief which was awarded to all properties in 2020-21

[2] Excluding zero-rated properties

Source: Non-Domestic Rates Relief Statistics 2020

[1] Excluding zero-rated properties

Source: Non-Domestic Rates Reliefs Statistics 2021

As noted above, appeals have been submitted for 49,400 properties over 2019-20 and 2020-21. This represents less than 20% of all properties listed on the valuation roll.

Evidence also points to a correlation between RV and the likelihood of a COVID-19 appeal, with properties with higher RVs submitting relatively more COVID-19 appeals than properties with smaller RVs (see Figure 1 below). Under 20% of premises with an RV below £15,000 submitted a 2017 revaluation (17%) appeal, or a MCC (COVID-19) appeal (11%) (data is not held for other running roll appeals).^[3] In contrast, more than two thirds of premises with an RV over £95,000 submitted a revaluation appeal (81%), or a MCC (COVID-19) appeal (67%).

The Scottish Government announced its intention to rule out appeals based on the impact of COVID-19 in June 2021, and laid secondary legislation to help deliver this in September 2021. Scottish Ministers have carried out extensive consultation and engagement with all the major business representative bodies on COVID-19 matters, and continue to engage regularly. The vast majority of businesses did not identify the Government's stance on MCC as a significant issue.

Specifically on the proposal that the impact of coronavirus not be taken into account when considering MCC appeals, during the Local Government, Housing and Planning Committee's scrutiny of the Valuation and Rating (Coronavirus) (Scotland) Order 2021 (S.S.I. 2021/445), the following views were expressed by business representative organisations:

• it is at odds with the principle of certainty and fairness, and could burden those businesses concerned with rates changes they would not otherwise have to bear (Scottish Chambers of Commerce)
• few firms would take this route and few would be successful. The reliefs that it introduced have been far more important to … members (FSB)
• the decision to restrict the basis for MCCs in the 2020 Act was wrong. Cases should be considered on their merits…MCCs should be allowed to proceed and allow the Courts to make a determination (Scottish Property Federation)
• concerned at the loss of the rights of appeal (Scottish Chambers of Commerce, Scottish Wholesalers Association)
• anticipate that the majority will prefer to receive continued relief as opposed to challenging some of the appeals that are in play at the moment (Scottish Tourism Alliance)
• removing the right to appeal seems to go against the idea of fair and transparent taxation system, but key concern for members or majority of hospitality businesses which will be focused on what happens after April 2022 and the revaluation date in April 2023 (UK Hospitality)

The views expressed all referred to the difficulties which businesses have faced during pandemic. All recognised and welcomed the reliefs which had been provided to businesses during the pandemic, and the need for future support, and consensus on the importance of early clarity on this.

Official reports and papers from these meetings can be found at Scottish Parliament Local Government, Housing and Planning Committee Official Reports: LGHP Committee 26 October 2021 and LGHP Committee 9 November 2021; and Papers LGHP/S6/21/8/1 and LGHP/S6/21/10/3.