CONCERN is mounting over a delay to the introduction of changes to the business rates appeals process, as hospitality trade campaigners ramp up calls for a new approach to determining bills for the sector.

A senior ratings expert has expressed worry that business owners will not be given sufficient time to appeal bills that will follow the next revaluation of non-domestic property in Scotland, which is due to take effect in April.

Ken McCormack, partner at property firm Montagu Evans, said the delay in the publication of regulations that will overhaul the old appeals process means business owners will have little time to challenge the rateable value given to their properties. Draft regulations, which aim to modernise the appeals system and reduce the volume of appeals, were published at the end of 2021. But it will now be October before the final regulations come into force.

Mr McCormack told The Herald: “The main impact will be the lack of time for ratepayers to understand the new system and rating agents to implement new IT systems.

“The Scottish Assessors will provide draft valuations at the end of November 2022. Ratepayers will be allowed to discuss their draft valuations with the Assessor between the end of November 2022 to March 31, 2023, but due to the lack of time and resource issues it is unlikely any meaningful progress can be made before the official rateable values are issued and come into force on April 1, 2023.

READ MORE: Hospitality trade on ‘cliff edge’ as rates bills poised to ramp up

“Both the Scottish Assessors and ratepayers should have been made aware of the proposed legislation changes earlier to allow them to fully understand what will be required for a successful proposal to be accepted by an assessor.”

Mr McCormack has already publicly expressed concern that the changes, which will see the current appeals system replaced by a two-stage proposal process, place an undue burden on business owners who wish to challenge valuations. Asked to elaborate on his concerns, Mr McCormack said: “Unless a client has been informed of the proposed changes by their rating agent, I suspect most ratepayers remain the dark about the recent changes.

"Clients are concerned about the lack of information being provided to them and what the new proposals mean. They are really concerned about the information they will require to provide within a very short timeframe. The draft regulations state that when submitting a proposal the ratepayer (or their agent) needs to supply a detailed valuation, evidence of how they have arrived at the valuation and any other evidence to support this valuation. Once submitted the ratepayer will not be allowed to provide any further evidence even if the assessor submits either any new evidence or evidence which does not support the ratepayers contentions.”

READ MORE: Scott Wright: When will economic woes begin to make presence felt in housing market?

Mr McCormack highlighted his concerns as hospitality campaigners renewed calls for a change to the way rates are calculated for their sector.

Pub, hotel and restaurant owners have long argued that their industry pays higher rates than other sectors because assessors have traditionally used a figure known as a hypothetical achievable turnover in determining bills. The hospitality trade says this method fails to capture how profitable businesses are, resulting in bills that are disproportionately high.

Now, as the next revaluation of non-domestic property approaches, hospitality figures say that a fairer method is needed to help the industry recover from the pandemic.

Calum Ross, who owns the Loch Melfort Hotel near Oban with wife Rachel, said: “The industry has been fighting this battle with the Scottish Government and the assessors for the best part of 10 years, and indeed we inputted into Barclay Review, but our requests and our thoughts were pretty much ignored. It is not just pubs, it is the whole of the hospitality industry [it affects]. It is the actual methodology in and around valuing properties in the hospitality sector that is open to challenging question and has been contested by the industry for many years.”

READ MORE: Scott Wright: Tourism has huge battle on its hands as cost-of-living crisis derails recovery

He added: “The industry’s gripe with it is [that] it takes no consideration atall of cost, or actual profit being delivered by the businesses.”

Paul Togneri, senior advisor at the Scottish Beer & Pub Association, said: “There are several changes we’d like to see, including a lower percentage of turnover being applied, higher allowance for the sale of food and sector specific reliefs to support those most impacted by the pandemic. We will continue to push the Scottish Government for additional support in the form of rates relief as soon as possible and [are] engaging with the Scottish Assessors Association ahead of next year’s revaluation to secure fairer rates in the longer term.”

Leon Thompson, executive director of UKHospitality in Scotland, noted: “We continue to make the case for reform of business rates to arrive at a fairer and more reasonable level of rates for our businesses. The current way they are calculated means that hospitality, which generally requires more space, investment and therefore pay higher rents, results in a higher rateable value relative to turnover.

“UKHospitality wants to see a taxation system that takes into account the modern digital economy, with some fresh thinking to identify which sectors are able to pay more. Business rates, in their current outdated form, remain one of the biggest barriers to recovery for operators looking to rebuild following the pandemic.”

Meanwhile, Mr Ross expressed frustration that some local authorities are distributing the current relief from business rates for the hospitality, retail and leisure sectors over a 10-month period, rather than three. The Scottish Government had provided that businesses in these sectors receive 50 per cent relief, up to a maximum of £27,500 per business, for the first three months of the financial year, which began on April 1.

Mr Ross told The Herald: “It certainly has undermined the intention of the Scottish Government, which was to give a bigger amount of relief for a shorter period, when businesses were returning to paying business rates for the first time in a couple of years.”