Following the publication of the Barclay Review of Business Rates in Scotland, leading commercial property firm Colliers International is calling on the Scottish Government to implement its recommendations at the earliest opportunity.
Louise Daly, associate director, Rating, at Colliers International in Scotland, said: “The Barclay Review recommendations are clearly an attempt to spread the rates burden more evenly, which would be very welcome to thousands of businesses currently struggling to pay high rates when, at times, their competitors are paying none. We hope the recommendations of the report will be implemented without delay.
“In implementing the recommendations, it is important that the Scottish Government resists the temptation to only focus on any potential revenue raising aspects of this report. It must also give effect to aspects that increase fairness within the system and which help to make it revenue neutral overall. If the Government refuses to give effect to the report fully it will result in a similar outcome to the weak implementation of the Lyons Inquiry of 2007, where certain elements were selected and other ignored. If the Government was to adopt a similar approach it would represent a huge missed opportunity to review the restrictive, outdated and unresponsive rates system.”
Ms Daly said positive aspects of the review include the introduction of a three-year revaluation cycle, with a 'tone' date a year prior to be used as a reference for values.
“This provision should be welcomed by all ratepayers, as it instantly makes the system more responsive to changing markets,” she said. “It would be a welcome move from the Scottish Government to exert its devolved powers and lead the way for fundamental changes to the business rates system north of the border. If the Scottish Parliament made changes such as this prior to Westminster, this would be a breath of fresh air, demonstrating that independent decisions can provide a progressive springboard for the rest of the UK to potentially follow the lead of Scotland.”
"From the perspective of responding to changes in the market, more frequent Revaluations are a welcome recommendation. However, it is arguable whether this does go far enough, as the Material Change of Circumstance appeals are now so limited in their scope. As a consequence, Scotland is a less competitive place to do business.
This particular point was put forward by the industry but has not been included within the recommendations. Such omissions are clearly the issue with the scope of the report, as any changes would have to remain revenue neutral.
Another aspect where Scotland currently is less competitive than in England is in respect of the large supplement on the Uniform Business rate. Ms Daly added: “Currently the large uniform business rate is higher in Scotland than in England. It should be reduced and that would be a welcome change to larger property occupiers and investors, but will have to be paid for by other points considered within the report, such as empty property relief applications and potentially large scale commercial processing on agricultural land. Some of these measures will put more pressure on landlords with vacant stock.”
According to Ms Daly, the implications of implementing some of the recommendations with only the view of revenue neutrality could have a significant negative impact on the built and natural environment.
Ms Daly explained: "Removing the 42 days reset period in respect of empty property relief does not encourage landlords to bring their properties back into economic use through means such as short term tenancies. This will actively encourage demolitions to take place, diminishing the property stock.
"Restricting the relief on listed buildings to a maximum of two years and stating that the rates liability for property that has been empty for significant periods should increase is quite dangerous. Listed buildings come with additional costs, due to the nature of the property and any alterations or works that may be required to be carried out. Landlords do not deliberately retain empty property and would much rather have a tenant in place providing an income stream. Limiting relief on such properties could cause them to fall into an uneconomic state of repair. The proposed measures will do little to raise revenue and in the long terms actually work against the incentive of better supporting business growth and long term investment.
"In terms of large scale commercial processing on agricultural land, the distinction needs to be clearly drawn and exactly what type of processing activity specified. It is proposed to do this through consultation and that this will be a long term measure. However, implementing measures such as this with Brexit negotiations taking place should not happen. "