CBRE comments on Scottish Government business rates relief announcement

Brian Rogan, head of Rating and Taxation for CBRE in Scotland

The Finance Secretary, Derek MacKay, has announced an ad hoc package of measures to assist business ratepayers who will face huge increases in their business rates liabilities due to the forthcoming rating revaluation.

The additional support package includes:

· Almost 8,500 hotels, pubs, restaurants, cafes and other accommodation will benefit from a cap on any increase to bills of 12.5%
· Support for more than 1,000 offices in Aberdeen and Aberdeenshire with increases in bills capped at 12.5%
· Relief for renewables companies, including hydro
· Confirmation of free revaluation appeals – with no fees or restrictions as in other parts of the UK
· Early Government action on the findings of the Barclay review into Business rates – due in July
· Working with any local authority to introduce a local rates relief scheme to support key sectors or localities

Commenting on the announcement, Brian Rogan, head of Rating and Taxation for CBRE in Scotland said:  “Whilst any measures to alleviate the burden of rates increases are welcomed, the package of limitations on increases in rate liabilities announced by the Finance Secretary does little to support the credibility of the Scottish Government’s policies on this area of tax and will do nothing to rebuild confidence in the current business rate regime.

“The fact that these measures have had to be introduced shows the extent to which the current rating legislation is not fit for purpose.  Businesses needs a system that quickly and properly reflects changing economic conditions without having to wait for the Finance Minister to bring forward complex and reactive provisions every time there is a revaluation.”

This is not a new issue on the Scottish Government agenda; in November 2012 John Swinney stated, “the Scottish Government will take the time we need to get reform of the business rates system right. Before 2007 the poundage rate in Scotland was set higher than that of the rest of the UK putting Scottish business at a competitive disadvantage. That is a danger that must be avoided.”

Brian Rogan continued:  “Businesses in Scotland will rightly feel disappointed that more than four years later there is still some way to go before we have a system that is right.”

Derren McRae, head of CBRE’s Aberdeen office, added:  “Despite the restrictions on liability increases announced today, I would urge all businesses in the North East to review their revaluation assessments very carefully and ensure that appeals are lodged before the September deadline.

“Valuation in the North East commercial markets in particular is very difficult because of our exceptional local economic circumstances.  It is possible that many revaluation assessments, which are merely the Assessor’s estimate of value, could be incorrect and excessive.  Businesses have the ability and the right to challenge these values and we would strongly recommend this course of action.”