WARNINGS that the method to calculate controversial new business rates was flawed and would lead to spiralling bills for thousands of firms were ignored, a leading chartered surveyor claims has claimed.
Assessors were said to have been told that using turnover to determine licensed premises’ rateable values would result in unaffordable bills for hundreds of businesses – and bore no relation to their ability to pay.
But Douglas Lambie, an associate at property firm Ryden, said has revealed that those warnings were stonewalled, leading to one of the biggest crises the Scottish licensed and hospitality sectors has ever faced.
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The revelation comes as Critics claims claimed that the Scottish Government ignored warnings that the revaluation of business rates would cause chaos for licensed businesses.
The Scottish Conservative Party said Finance Secretary Derek Mackay was told hotels would see their rates bills rise by between 30- and 50 per cent, but did nothing to help.
And the Scottish Liberal Democrats claimed that Holyrood effectively ignored its own consultation, which showed revealed that nearly two-thirds of businesses supported the introduction of transitional relief so companies could adjust to the new bills.
Douglas Lambie, an associate at property firm Ryden, alleged that assessors across the country “completely disregarded the recommendations” he and fellow chartered surveyors had made.
That is in spite of the assessors inviting responses from surveyors ahead of the most-recent revaluation of non-domestic properties.
Mr Lambie, who said his views capture the mood in the wider surveying sector, said: “The assessors’ scheme bears no resemblance to market reality.
“If you are assessing licensed premises’ as a business, then you must pay as much attention to profit margins and costs as turnover. And the assessors’ scheme fails miserably to address that.
Mr Lambie added: “They’ve had seven years to get it right. I met them the best part of a year ago and I don’t know whether it was just to say they have had meetings with representatives to tick boxes.”
Asked whether he thought the assessors gave serious consideration to surveyors’ views, he said: “No. I think they had preconceived ideas.”
Mr Lambie, who has more than two decades’ experiencing valuing pubs, hotels and restaurants, said using turnover alone is too crude an instrument to gauge licensed outlets’ rateable value. A He explained that a pub in Edinburgh’s Royal Mile and one in a city housing scheme could end up having the same rateable value because they generate similar turnover.
He said: “Yes, turnover is important, but so are the profits you can generate. If you can sell a pint for a fiver, and [someone else] can sell the same amount for £2.50 [a pint], one is going to have a massively higher gross profit margin [than the other], assuming everything else is the same. They are all massively different.”
Mr Lambie also questioned the reliability of data used by assessors to calculate bills. Although business owners are sent forms to provide turnover figures ahead of each revaluation, he said the reality is that only 10 per cent of operators respond to those requests.
Mr Lambie added: “The last scheme seven years ago was poor. This one is even worse.”
The crisis es has led to an unprecedented unity among groups representing the wider licensed tourism and hospitality sectors.
Yesterday, the Scottish Licensed Trade Association, Scottish Tourism Alliance and Glasgow Chamber of Commerce convened to prepare for their meeting with Mr Mackay and Economy Secretary Keith Brown next week.
Meanwhile, The Scottish Conservative Party repeated its call for the current revaluation to be put on hold as it claimed Mr Mackay had ignored the concerns of industry prior to the rates crisis erupting. The party noted that the Scottish Government had declined an offer from Cosla (Convention of Scottish Local Authorities) to carry out modelling work on the latest revaluation.
Shadow finance secretary Murdo Fraser said: “Business groups were warning about the impact of this revaluation last year. Yet, from the very start, the SNP’s response has been to pass the buck and insist it is nothing to do with them. It is a complete abdication of responsibility.”
Scottish LibDem leader Willie Rennie hit out at the Government for ignoring the findings of its own consultation on rates, which showed that 62 per cent of businesses supported transitional relief.
Mr Rennie said: “For the Scottish Government to consult then reject the results just because they don’t like the answer shows how arrogant they have become.
“A transitional scheme is the right thing to do and would provide the support businesses need in such uncertain times. It would also keep Scotland competitive and not drive business away.”