Today’s ruling from the Lands Valuation Appeal Court (LVAC) will have dire consequences for Scottish ratepayers who face fiver years of excessive business rates, according to rating experts, Gerald Eve.
The LVAC’s decision to uphold an appeal from the Fife and Tayside Assessors against a previous ruling will mean that rateable values will continue to be determined based on a property’s rental value in April 2008 – a figure that doesn’t reflect current market conditions in which rents in some cases may have fallen 50% from their peak.
This ruling is further complicated by the Scottish system which allows for buildings that have been subject to alteration (extension, renovation etc) to make a case to have rateable values considered at the prevailing market conditions. This could lead to an absurd system under which two identical properties can be subject to entirely different rates bills.
Graham Howarth, a partner based at Gerald Eve’s Glasgow office, comments: “The decision by the LVAC to overturn the original decisions is clearly a defeat for common sense, with ratepayers now facing bills double what they should be.
Gerald Eve represented six retailers in the Mercat / Overgate test cases that saw the Fife and Tayside Valuation Appeal Committees rule that there was a Material Change of Circumstances and that more recent rental values should be considered when determining rateable values. The Assessors offices appealed against these decisions to the LVAC, but these appeals have now been allowed by the courts. Business rates from 2010 to 2015 will continue to be calculated based on rents in April 2008, when in many areas they were double what they were a year later.