PROPOSED increases in the rateable value of licensed premises across Scotland could have a damaging effect on the licensed trade, say operators and trade groups.
The draft values, which will see many pubs, bars, restaurants and hotels forced to pay higher business rates for the next five years, were unveiled by Scottish assessors last month.
The new values will take effect from April 1, at which time operators will have until September 30 to lodge an appeal. However, businesses will be required to pay the full fee up front, regardless of whether they appeal or not.
Speaking to SLTN, Willie Macleod, executive director, Scotland, at the British Hospitality Association (BHA), said members of the trade group have seen their rateable values increase by an average of 48%, with some seeing considerably larger increases.
Macleod said the new rateable values are “extremely serious for our sector”.
He pointed out that the higher rateable values come at a time when the profitability of hospitality businesses has already been impacted by increased costs from the National Minimum Wage, pension auto-enrolment and various expenses caused by the devaluation of the pound.
“I think we’ll see profitability reducing, an impact on employment, and a reduction in an ability of businesses to reinvest,” said Macleod. “At worst I think we’ll see some casualties.”
This was also the view of Mike Wilson, owner of Aberdeen-based multiple operator Epic Group, who said the system for calculating rateable values “is not sustainable for the night-time economy, and I think there will undoubtedly be casualties as a result”.
“Hopefully the assessors take a realistic view, otherwise there’s going to be a lot of casualties,” said Wilson.
Neil Morrison, owner of Macgochans in Tobermory on the Isle of Mull and the Lochside Hotel on Islay, agreed.
“In the past we have been hit with increases in rates once we have refurbished a business and increased its trade; they don’t seem to take into account the expense of the improvements and the running costs of increasing the trade,” said Morrison.
“If businesses were supported by the government better then they would have a chance to flourish, increasing employment and allowing the owners to put more back into their business. This would have a knock-on effect to tourism and trade if there was a step up around the country in business reinvestment.”
Gary Louttit of Shepherd Chartered Surveyors said rateable values have increased “across the board with few exceptions”. “Yes, there are some properties which have fared better, with a small percentage where RVs have actually decreased and some which have remained at the same level, but in the vast majority of cases, operators within the licensed trade will be paying more come April 1,” he said.
Martin Clarkson, partner at Gerald Eve, said: “Businesses and industry bodies can continue to engage with assessors, MSPs and MPs prior to the new rateable values being formalised and coming into effect from April 1, after which the only recourse may be lengthy and painful appeals.”