Business Rates Briefing - update following recent Scottish government correspondence

This month, the Scottish government issued a letter informing ratepayers of changes to the business rates system in Scotland following the Barclay review of Non-Domestic Rates.

While it briefly mentioned changes to the frequency of revaluations, the restructuring of the appeal system and standardised bills across local authorities, the most important point to note is in relation to Assessor and local authority requests for information which now incur civil penalties for non-compliance.

The final regulations around civil penalties and the associated appeal procedures come into force on the 21 December for Assessor Information Notices and 1st April 2021 for Local Authority Information Notices.

We expect Assessors to start issuing the notices shortly thereafter.

Assessor Information Notices (AIN)

These notices replace the questionnaires previously issued by the Assessor to ingather the information required to produce the Valuation Roll. Under the old system the Assessor could pursue a criminal penalty for failure to complete and return a questionnaire however in reality this power was seldom used as it proved difficult and costly to enforce. The procedures around the new AINs are designed to make this enforcement process easier to apply but they also increase the potential penalty for non-compliance to 71% of the rateable value of the assessment on which the notice is served.

If you receive an AIN:

• These can be issued to anyone and the Assessor can request any “such information as the assessor may reasonably require for the purpose of exercising the assessor’s functions relating to Non-Domestic Rates in relation to the lands and heritages referred to in the notice”.
• You must respond to it within 28 days otherwise the Assessor must issue a penalty notice stating failure to comply and imposing a fine of £200 or 1% of the rateable value (whichever is greater).
  If after 42 days from the date of the notice you have still not complied, then a further penalty of £1000 or 20% of the rateable value is imposed.
• After 56 days from the date of the notice a further penalty of £1,000 or 50% of the rateable value is imposed.
• Penalties are cumulative so after 56 days the fine will total £2,200 or 71% of the rateable value.
• There is a right of appeal against a penalty notice to the Valuation Appeal Committee on the basis that it is made in writing and within 28 days from receipt of the notice.
• You are not obliged to pay the civil penalty while an appeal is ongoing, and the Assessor can remit the penalty prior to the hearing if they see fit.

It is important that when an AIN is received a response is sent to the Assessor as soon as practicably possible, even if it is to say that you do not hold the information requested or require more time to provide it, otherwise the Assessor will have no alternative than to issue the penalty notice on the expiry of the initial 28 day period.

Provision of Information to Local Authorities

Like the Assessor, Local Authorities have new powers to ingather information in the form of Local Authority Information Notices. From 1st April 2021:

• They can be issued to anyone they think is the proprietor, tenant or occupier and they can request “such information as [the Local Authority] may reasonably require for the purpose of issuing any demand or other document relating to Non-Domestic Rates".
• You must respond within 21 days after which you may be issued with a further notice requesting the information and/or issued with a civil penalty of £95 for the first notice or £370 for any subsequent notice.
• As with AIN’s anyone in receipt of a penalty notice can appeal to the Valuation Appeal Committee within 28 days however be aware that subsequent requests for information can be issued prior to the appeal being heard and each has the potential to generate further penalty notices.

In addition to the above, from 1 April 2021 there is a statutory duty on anyone liable to pay rates and regardless of exemptions to notify the local authority of anything that would affect whether or not Non-Domestic Rates are chargeable in respect of their property, or would change the amount of Non-Domestic Rates payable in respect of them. Failure to notify the local authority within 42 days of such a change would generate a penalty notice of £370.

Next Steps

It is important with these changes being introduced that businesses have procedures in place to handle requests for information efficiently and within the time limits prescribed. Notices will be issued to proprietors, tenants and occupiers of property and as it is with them that the liability for the civil penalties will lie it is important to understand what is required.

For more information please contact Derek Kidd, Business Rates Director in our Glasgow office. 

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