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Battle launched to save Scotland's city centres

BUSINESSES have launched legal battles across Scotland in a desperate bid to bring down their bills amid the continuing decline on the high street caused by the recession.

snapshot: Retailers on Sauchiehall Street in Glasgow are among those feeling the effects of having to pay 'unfair' pre-downturn business rates. Picture: Marc Turner
snapshot: Retailers on Sauchiehall Street in Glasgow are among those feeling the effects of having to pay 'unfair' pre-downturn business rates. Picture: Marc Turner

Household names such as the Bank of Scotland, The Body Shop, Santander and Superdrug are among dozens of firms going to court to get their rates reduced.

Lawyers have warned of an "unprecedented situation" as local assessors' offices are pursued over the level of business rates being charged on premises in town and city centres.

The move threatens to blow a hole in the Scottish Government's budget as firms seek to claw back millions already earmarked for public spending.

Retailers including nurseries and small shopkeepers are joining the big names in calling for help from the Government, saying the challenging economic situation is not being reflected in the rates they pay.

Court cases have been launched by retailers in Edinburgh, Glasgow, Dundee and Kirkcaldy and elsewhere as firms contest the size of their bills.

Current business rates were calculated in 2008, before the extent of the downturn became apparent. The amount firms pay depends on the size of their shop front and varies between roughly £300 and £1500 per month.

Retailers say the current tariffs are heaping an "intolerable" burden on top of declining profits from falling sales that have already forced a number of firms to go to the wall.

In February, the number of empty shops hit an all-time high, with, on average, nearly 15% of all town centre units lying vacant as shoppers cut back on their spending in an effort to cope with high food and fuel prices and rising mortgage rates.

Last night, Garry Clark, head of policy and public affairs at the Scottish Chambers of Commerce, warned that business rates were putting an unnecessary strain on already struggling retailers.

He said: "We believe that it is important for our system of non-domestic rates to recognise that businesses today are effectively being billed on the basis of their performance immediately before the Scottish economy dropped into a precipice during 2008-09; a situation from which we have still not fully recovered.

"This is clearly unfair and we would hope that the law could find a way to recognise this."

Colin Borland, the Federation of Small Businesses' (FSB) head of external affairs in Scotland, said the current rates system was a "headache" for its members.

He said: "Anecdotal evidence suggests that the system has not adapted well to the changing economic circumstance of the past five years.

"If the law means that the rates system can't adapt to the economic circumstances that we're facing, perhaps it's time we look at the law."

Scottish Retail Consortium spokeswoman Sarah Cordey said: "If property costs become too steep, the sad likelihood is that more shops will close, which drags down an entire area and makes it harder for businesses of all kinds to thrive."

The most recent challenge to the business rates system has come from retailers in Glasgow's Sauchiehall Street, who successfully argued for a reduction when they appealed to the local Joint Valuation Board.

The firms that launched the appeal as a group included the Royal Bank of Scotland, Schuh, Greaves Sports, Sports World, Phones 4u, Optical Express and Thorntons, as well as Savers Health and Beauty, Lush, Barratts Shoes, the Outdoor Group and MM Henderson.

However, their case will now have to be heard again after the Assessors Office for Glasgow, represented by Geoff Clarke, QC, successfully appealed to the Court of Session to have the board's decision reversed.

The court is also due to hear cases later this month on behalf of retailers in the Overgate shopping centre in Dundee and the Mercat Centre in Kirkcaldy, and many others are in the pipeline.

Peter Muir, director of rating at Colliers International, who worked on the Glasgow case, said: "As the rental market outwith the established prime retail areas declines, appeals will continue to be raised by ratepayers which, if not agreed, are likely to be listed for hearing before Valuation Appeal Committees."

Mr Muir added: "Annual rates are a significant burden on any business and if this burden cannot be reduced, challenges will continue.

"As to whether the Committee decision is then subject to appeal will be down to the losing party. I can, however, see more cases appearing in the Court of Session as long as the current market struggles."

A spokesman for the Scottish Government said: "We have made clear on a number of occasions that estimates of future business rates income figures take into account a range of factors, including the impact of losses from successful valuation appeals. These income estimates are kept under regular review as more up- to-date data becomes available.

"The Scottish Government has made a commitment that any shortfall in business rates income will not fall on either businesses or local government."

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