August saw the publication of the Report of the Barclay Review of Non-Domestic Rates – which had been a highly anticipated due to the impact of recent rates hikes on hospitality businesses and the welcome, albeit temporary cap, put on increases by the Scottish government.
The report authored by Kenneth Barclay made 30 recommendations, and was made in consultation with more than 150 business, trade and professional bodies and others.
However the British Hospitality Association (BHA), Scottish Tourism Alliance (STA) and Scottish Licensed Trade Association have been quite cautious in their response to the report. But they have pressed the Scottish Government to find out what proposals they have for extending the relief currently available on extortionate rateable values beyond 31 March next year.
While agreeing with the fact that it would be difficult to to adopt a system of valuation that would be likely to meet with the universal approval of all businesses in such a diverse sector the consortium re-iterated its submission to Barclay that the “Scottish Assessors engage with the industry, its trade bodies and advisers to discuss and agree a future valuation framework which is acceptable to and understood by the industry.”
They said that the BHA and the other trade organisations would continue to make this case to Scottish Government as it considers how it will respond to the Barclay review, and have already scheduled a meeting with Finance Secretary, Derek Mackay MSP.
However the consortium did welcome several of the recommendations in the report including proposals:
To introduce a Business Growth Accelerator – to boost business growth, a 12 month delay should be introduced before rates are increased when an existing property is expanded or improved and also before rates apply to a new build property. To expand the Fresh Start Scheme.
To reduce unfair rates competition with hospitality businesses from universities and other public sector service; To reduce valuation intervals to three years based on a Tone Date the previous year; To reduce the Large Business Supplement; To review of the Small Business Bonus Scheme
That Scottish Assessors should: improve the information available on rateable value calculations and methodologies; provide greater transparency and consistency in approach and consult on proposed changes to Practice Notes; To reform of the appeals system; To apply a civil penalty for failure to provide information to the Assessor.
The consortium concluded, “ The industry realises that these reforms will take time to implement and that some may require primary legislation but urges Scottish Government to move ahead as soon as possible and to engage with businesses as it reaches decisions on the outcome of the report.”
The hospitality industry has also made it quite clear that in the past that it has not been happy with the assessors valuations particularly with regard to their industry. Some hotels saw rating valuation increases of some 400%. Barclay has suggested the following which could alleviate some of the industry’s concerns:-
The Scottish Assessors Association (SAA) should produce and publish an annual report on valuation practice and outcomes. This is particularly important in a revaluation year where the report should be substantive and highlight the average and range of movements in rateable value across council areas and sectors, any changes to valuation methodologies and summarise engagement with national and local trade bodies. Outside of revaluation years, a shorter summary report should be produced;
The Assessors should provide more information on the evidence used at each revaluation to support valuations. While we appreciate that this will require detailed consideration in terms of what can be made available within the boundaries of data protection and commercial sensitivity, at the minimum ratepayers should be informed which comparator rental properties were used to inform their valuation;
Appointments to the SAA should be more transparent, and; Minutes of meetings with sector representatives should be published (with any commercially sensitive data redacted as necessary).
Stuart Houston, Director of Finance at Redefine|BDL Hotels (RBH) commenting on the review said, “ We have been vocal in our opposition to the current business rates system north of the border and there are several positives to be drawn from the recent Barclay Review.
“For us, the core issue has been the perception that the revaluing system is non-transparent and favours a one-size fits-all approach.
“The new recommendations would go some way towards redressing these concerns. Indeed, the call for short-term measures to make better information on rates available to ratepayers, and a medium term measure to ensure assessors provide more transparency and consistency of approach, would be beneficial to the hospitality sector and all ratepayers alike.
“Other measures which we would particularly welcome are the Business Growth Accelerator and the reduction of large business supplement.
“A 12-month delay in introducing rates to new properties and in newly expanded or improved
properties would further incentivise our investment partners by allowing them to realise a return on capital spend before incurring additional costs.
“What’s more, with our entire Scottish estate subject to large business supplement at present, a reduction in this would remove the current additional cost burden for our owners trading in Scotland, aligning us with other areas of the UK.
“While the Business Growth Accelerator wouldn’t be viable until 2018-19 and the large business supplement reduction taking longer still, we still welcome the recommendations and call for the Scottish Government to seriously consider their implementation.”
Meanwhile, the company has cited reservations over the suggested introduction of three yearly revaluations from 2022, but recognises the call for this to be implemented in tandem with reforms to the appeal system.
Stuart added: “Longer revaluation periods offer greater certainty for longer term investment decisions but, if the necessary changes are made to the appeal system, this is not a wholly unfeasible reaction to the changeable current market.
“What we didn’t necessarily see in the report was a call for a more bespoke approach to be adopted by evaluators towards sectors like hospitality, which are arguably at a disadvantage under the current system.
“In short, we see the recommendations of the Barclay Review as a positive step, but would urge further changes still.”
The full report is online. Check out…
REMEMBER: Any RATING VALUATION appeals will have to be lodged before September 30 this year or the right of appeal will be lost. That deadline has not been shifted.