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By Scott Wright

PLANS to overhaul the appeals system for non-domestic rates are “anti-business”, a prominent Scottish property rating specialist has declared.

The next revaluation of non-domestic property, which will determine how much Scottish firms pay in business rates, will be carried out by Scottish assessors in April 2023. But under draft regulations tabled by the Scottish Government the system of appeals for the next revaluation will be radically different – and there are fears it will put business owners at a serious disadvantage.

“The whole process is changing, and it is going very much anti-business,” declared Ken McCormack, partner at property firm Montagu Evans.

Mr McCormack, who has worked in rating for more than 40 years, explained that under the current system, valuations normally take place from April in a valuation year, with rate payers then given six months within which to lodge an appeal. Appeals are then listed for hearing over a number of years.

Now McCormack said that will be replaced by a “complicated” two-stage proposal process that he argues will place an undue burden on rate payers.

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This year, assessors will release draft valuations at the end of November, and instead of being entitled to lodge an appeal, rate payers will from April be given a shorter window in which to submit a proposal. It means that from April a business will have four months to lodge a proposal against that rateable value.

“But it goes much further than that,” Mr McCormack told The Herald, “because along with the proposal you will need to supply [a] detailed grounds of appeal– that is, why you think that value is wrong, and thirdly you have to supply detailed evidence as to how you have arrived at that alternative rateable value.

“The ordinary rate payer will have no clue as to how to do that; it’s a fairly complicated process, and the only way they would be able to do that would be to instruct [a professional rating specialist] to deal with that. Even then, would the experts in the field have that detailed knowledge? We don’t have the same information gathering assessors do, and that will be extremely difficult, especially within that four-month window.”

Mr McCormack added: “The intention is once you have lodged the proposal, and the detailed grounds, that’s it. You cannot then expand upon those grounds at any stage later on.

“The normal rate payer is just not going to know what to do with it. Where is your normal shopkeeper, factory owner or office user going to get the detail on which to lodge detailed grounds for appeal, and supply evidence? It’s a strange one. In my view it goes far deeper than is necessary.”

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In its consultation on the draft regulations, the Scottish Government said the proposed changes aim to improve information sharing between rate payers and assessors. It states that the “new [proposal] stage is aimed at encouraging a settlement between the assessor and the proposer prior to the need for involvement by the first-tier tribunal in future.”

The consultation notes: “In order to ensure meaningful engagement between parties at the proposal stage and given that appeals will be appeals of an assessor’s decision on the proposal... it is proposed that in general no additional information can be provided at appeal stage to the Scottish Tribunals, over and above what has been exchanged between parties at the proposal stage.”

The next revaluation of non-domestic rates in Scotland, which takes effect next year, will be based on property rental values taken on April 1 this year. That “tone” date had originally been set for April 1, 2020, but was pushed back to ensure valuations better reflected the impact that the pandemic has had on the economy.

The rating system in Scotland moved to a three-yearly revaluation with a one-year tone date following the Barclay Review, published in 2017. Revaluations used to take place every five years.

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Andrew Boal, head of rating at Shepherd Chartered Surveyors, said: “Few would argue that the current rating system is perfect. There is little doubt that improvements could be made, and arguably need to be made to meet the demands of a three-yearly revaluation cycle, but the proposals as drafted represent a revolution as opposed to the evolution that would better serve all parties.

“The report of the Barclay Review says that ‘reform of the appeals system is needed to modernise the approach, reduce appeal volume and ensure greater transparency and fairness’.

“Our concern is that, if implemented as proposed, the draft proposals would replace a system that is not perfect with one that creates barriers and difficulties that need not exist. The Scottish Government recognises that, under the current regime, the vast majority of appeals are settled amicably. That fact should not be lost sight of, and in itself shows that the existing regulations work. We sincerely hope that the Scottish Government takes heed of the many responses received during the consultation on the draft proposals.”

Stuart Mackinnon, head of communications for the Federation of Small Businesses in Scotland, said: “The next business rates revaluation in Scotland is going to be important not only because it is the first since the pandemic, but also because the government is undertaking a number of reforms to how the system works. In an ideal world, we want to see businesses’ properties valued as accurately as possible to reduce demand for appeals. And the switch to a more frequent revaluation cycle may mean that some businesses choose not to appeal their valuation.

“In our experience the old appeals system didn’t work particularly well for local and independent businesses, especially those that chose to represent themselves through the process. That’s why we’ve made representations to ministers urging them to ensure the new system is user-friendly for business owners that don’t have expert knowledge or recourse to professional help.”