THIS July, the Barclay Review of Business Rates will deliver its conclusions. But after several weeks of chaos and disorganisation, no one would be surprised if Scotland’s business community was feeling pretty depressed about the prospects of positive change.
The Scottish Government certainly did the right thing in ordering a review – the current system is not fit for purpose. But it then complicated matters by allowing a revaluation which left many firms facing huge increases. When some objected, the Government then ordered a cap for certain sectors, but it has still left many businesses feeling uncertain and worried about the future.
The hope in the short term is that many businesses will heed the call of the property firm JLL, Glasgow Chamber of Commerce and others, and appeal against their new bills. Businesses have to pay their fair share of tax, but the anomalies in the current system should have meant the revaluation being put on hold until Barclay delivered its verdict. It is now too late for that, so businesses must do what they can by appealing and ensuring that they are not landed with unfair rateable values for the next five years.
In the longer term, the hope remains that the system will be reformed to ensure it better reflects what businesses are able to pay, particularly pubs which have their rates calculated partly on turnover while rates for other businesses are calculated largely on square footage.
There is also much to be said for the idea of reducing the rating revaluation cycle from five years to three. Oil and gas firms in Aberdeen face having to pay rates that were calculated in 2015 before much of the decline in the sector took hold and a three-year cycle would better reflect the changing economics for them and other businesses.
However, even if such a change went ahead, businesses would have to wait until 2022 for it to take effect. In the meantime, the hope must be that Barclay will find a way out of this mess. Scotland’s business community is confused and frustrated by the current rates – what it needs is a system that is simple, transparent and fair.
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