Scottish Non-Domestic Rates (NDR) reforms
By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)
27 March 2020
Following the Barclay Review of NDR in 2016 and the report which was published in 2017, ICAS has learned that having passed the Non-Domestic Rates (Scotland) Bill on 5 February 2020, the Scottish Government is due to write to owners, occupiers, and tenants of non-domestic property about the new measures that flow from them.
Key Measures
The key measures which will be highlighted include:
- From 1 April 2022, property revaluations will be carried out once every three years instead of once every five years.
- All local authorities will be issuing a standardised billing format to improve consistency and transparency
- Overpayments of rates are due to be processed more quickly
- Improvements are being made to the www.saa.gov.uk website.
- Ratepayers will be provided with a greater amount of information on how a rateable value has been calculated from the next revaluation.
- Ratepayers will be legally required to provide the information that is requested of them within 28 days. Failure to respond may result in a civil penalty. Continued failure to respond may result in an increased penalty.
- Failure by the ratepayer to respond to an information request within 84 days may result in them becoming liable for a penalty equivalent to 71% of the rateable value of the property.
- Assessors may request information from a proprietor, tenant or occupier of a property as well as any other relevant person.
- Information notices must be returned to the local authority within 21 days, or else a change of occupier should be notified to the local authority within 42 days. Failure to do this will result in a civil penalty of up to £370 from 1 April 2021.
- Debt recovery proceedings will begin when payment of any instalment is missed.
- A 2-stage appeal system will be implemented from 1 April 2022 with the objective of attaining early resolution outside of the formal appeals process and providing a better route to justice for those who proceed to formal appeals.
- Self-catering accommodation will be classed as a non-domestic property where proof that the property has been let for 70 days in a year and the intention to let it out for 140 days of the year, from 2020/21 onwards.
- Only properties that are occupied will qualify for relief under the Small Business Bonus Scheme.
- The period of occupation required between two claims for empty property relief will be increased from 6 weeks to 6 months, and the administration of empty property relief will be devolved to local authorities from 1 April 2022.
Recap on Independent Schools, Universities and Sports Clubs
The Barclay Review concluded that Independent Schools should not receive a rebate of 80% on business rates. The Scottish Government agreed and as such, all independent schools except independent music schools and schools supporting pupils with special needs must pay the full amount of business rates.
Despite the recommendations of the Barclay Review that only the core functions of Higher Education establishments should qualify for business rates relief, the Scottish Government has decided that full rates relief on all activities will continue to apply.
All sports clubs are to maintain the status quo as regards their eligibility to existing business rates relief.
Points to note from UK Budget 2020
The differences with these measures and the measures announced in the Budget announcements by the UK Chancellor of the Exchequer on business rates are noteworthy. On 11 March 2020 it was announced that:
A business rates relief review will be taking place in England in the Autumn, but in the meantime:
- Small business rates for small retail outlets valued at less than £51,000 will be suspended for one year;
- The abolition will also apply to hospitality and leisure premises, including cultural venues such as museums;
- A small business grant of £3,000 will be made available to all businesses qualifying for small business rates relief;
- Business rates discount for pubs will be increased from £1,000 to £5,000 for one year
At present it is not known whether any of these measures will be replicated in Scotland.
Further Information
For further information on the Scottish NDR position please visit https://www.mygov.scot/non-domestic-rates-guidance/.
For a timeline of the reforms, please visit the following link: https://www.gov.scot/publications/non-domestic-business-rates-roadmap-to-2025/.