Look out for a business rates battle in Scotland.
That is the warning from Peter Muir, newly-appointed director and head of Scottish rating at Colliers CRE.
He says there will be a hike in business rates in April and believes this could lead to a major battle between property owners and Scottish assessors.
He says the new rate demands for non-domestic premises, which come into force on 1 April 2010, are based on an analysis of rental levels and other relevant valuation factors, as they stood on 1 April 2008, several months before the property market fell sharply as a result of the global economic crisis.
He goes on: “Assessors may argue that, as the impact of the global recession was after 1 April 2008, it cannot be taken into account when arriving at proposed values applicable to the new Valuation Rolls. However, we are experiencing exceptional times and it is important for ratepayers to have their proposed assessments checked and, if necessary, formally appealed.
“Coupled with possible large increases in rateable values, we are still waiting to hear from the Scottish Government on whether or not the Transitional Relief scheme will be retained to cushion the blow in Scotland, as it has been in England.
“We can expect to see a considerable number of appeals being lodged, which will be hard-fought on both sides, some of which are likely to go before the Valuation Appeal Committees and, in certain cases, the Lands Tribunal for Scotland. It is vital that revaluation appeals are lodged before the statutory timetable of 30 September this year.
“It is envisaged that, given the current economic climate, a considerable number of appeals will be lodged by ratepayers or their retained agents, putting a strain on the committee’s ability to dispose of revaluation appeals by the statutory timescale of 31 December 2013.”
Muir is bullish about the property industry’s chances of successful outcomes during the appeal stage, either through negotiation with the assessors or, if necessary, before local committees or Lands Tribunal.
He states: “As well as the strong argument that valuations should take into account the decline in the market since 2008, there are a number of alternative avenues to challenge a property’s rateable value which had, until recently, been considered invalid grounds of appeal.
“One example is the ‘disturbance appeals’ lodged in respect of the disruption caused to ratepayers along the route of Edinburgh’s new tramline. Until recently, temporary reductions for disturbance would have been opposed unless the works continued for a considerable period of time, in most cases over a year. In some cases, the tramwork appeals have been granted reductions for periods of less than six months.
“The experience exists within the Scottish rating community to fight unfair valuations and we may well see clients and their agents banding together to present a single case, where the arguments of each appeal are similar. This would also reduce the significant burden on the committee in hearing each appeal in turn.
“The industry will be actively looking to identify potential cases which will clear the way for further successful appeals. Non- domestic rating looks set to be a real challenge for ratepayers in 2010 and beyond. Based on conversations I’ve had with clients, there is already an appetite to explore every avenue, to ensure proposed values are fair and reasonable.”
