By Matthew Lynas
LOCAL authorities have been left scrambling to implement the temporary cap on business rates increases for the hospitality industry with guidelines coming from Holyrood late in the day.
Guidance on implementing the cap of 14.75%, which represents the 12.5% announced by finance secretary Derek Mackay in “real terms”, was administered to local authorities on March 16, leaving councils with just over a fortnight to prepare before new rateable values (RVs) were due to come into force.
The Scottish Government has confirmed local authorities will implement the rates relief as an “application-based scheme” to comply with European Union State Aid rules. The need to apply was not disclosed by Mackay in his rates cap statement on February 21.
As SLTN went to press a number of local authorities had yet to lock in procedures for applying for rates relief, despite the April 1 implementation date for new RVs having passed.
A spokeswoman for The Highland Council said it had designed an online application form which it intended to make available “very shortly” but was “awaiting further clarity/guidance before full completion”. “Following representations from councils for example, the Scottish Government intends issuing further advice and information to local authorities this week to aid the implementation of the Scottish Government’s Transitional Relief scheme,” she said.
A spokesman for Glasgow City Council said “all 32 councils have been seeking further information on how this process will work”, adding that the council “would anticipate recalculating bills once applications are made – with any reduction in liability reflected in future payments”.
A spokeswoman for Aberdeen City Council said application forms for relief are currently available from the council’s business rates team on request.
A Scottish Government spokesman said that while it is for councils to administer the scheme, “we anticipate that businesses will be able to apply for the relief and have this applied to their bills before they have to pay any portion of their business rates”.
He added that the Scottish Government was “clear from the outset – on the day it was announced to parliament” that the 12.5% cap “was a real terms cap”.
The “real terms” component of the cap, which ties the relief to RPI inflation, was not mentioned by Mackay in his statement to the Scottish Parliament on February 21, however it was included in a business rates background document published on the same day.
Willie Macleod, executive director, Scotland, of British Hospitality Association, said it was “unfortunate” the inflationary component of the cap “wasn’t made clearer in the announcement”.
“I still believe that the cap on the new rates payable is a significant achievement, although it’s only for one year,” said Macleod. “Our focus now is to go on ensuring that we have a transparent and affordable permanent approach to the valuation of hospitality businesses and we hope that will emerge from the Barclay Review (of business rates).”