Amongst the bank statements which remain unopened, the Farmfoods flyers which go straight to recycling, valuation notices will be hitting door mats across the country.
As the reintroduction occurred, there was enough theatrics about ‘taxing the lairds’ to be suitable for a Shakespearian play but now that the Bill has passed and valuations are known, how has the drama unfolded?
Scene 1 – The Conflict Emerges
Let us think back to what was trying to be achieved from the reintroduction as set out in the Land Reform Bill’s policy memorandum – fairness and tax income.
The fairness issue seems reasonable but when you consider the most closely associated land uses of forestry and agriculture remain exempt it becomes unclear what fairness has been achieved. Regarding tax income, it is appreciated additional revenue is much sought after but the cost of administering the reintroduction or estimated income could not be reliably established at the time of the Bill and remains unclear.
The weakness of the case for the reintroduction was recognised by the parliamentary committee at early stages of the Bill but committee members were appeased by a letter from the Land Reform and Finance Ministers which set out the economic contribution of the sector, and promised to put draft valuations in front of committee prior to implementation. The unknown impacts were a key concern of the committee so it is disappointing the Scottish Government has failed to deliver this promise.
The Bill passed and the Assessors were therefore required to establish the net annual rental value of shootings and deer forests as part of the 2017 revaluation.
Scene 2 – The Valuations
Scottish Land & Estates supports the methodology the Assessors have applied. Concerns that the rates could be detrimental to effective deer management have been greatly reduced and there is no rates advantage to lowering deer culls.
The Assessors have used the evidence they received in the Return of Information Forms and set a rate per hectare for 6 land types to use where local evidence is not present. They have also established a quantum to reflect the reduced value per hectare for the larger areas of land. Finally, a smaller reduction can be applied to account for extreme restrictions on the land which prevent the rights being exercised. Game larders, rearing pens and other buildings will also be considered by the Assessor.
This affects all land with sporting potential regardless of whether the rights are exercised, which follows the legal position.
Unfortunately, the Assessors have lacked time to follow up on information provided in Return of Information Forms or carry out inspections. This has resulted in broad brush valuations which currently fail to take into account individual circumstances and, in some cases, have not correctly identified landholdings or occupiers.
Scene 3 – The Valuation Roll
At the time of writing there are 10,237 entries on the roll for shootings and deer forests. Of these, 72 have a rateable value over £15,000 and will have to pay at least some of their bill as the Small Business Bonus offers those with cumulative rateable values of up to £15,000 100% relief.
There will be some of those with lower rateable values who may still have to pay if they have other rateable subjects (for example holiday cottages or workshops) and their cumulative rateable value takes them over the threshold.
Interestingly, of the 72 who have rateable values over £15,000, 23 of these are Forestry Enterprise Estates. Forestry Enterprise Scotland is a government agency which manages the National Forest Estate. Make of that what you like.
Scene 4 – Ground Truth – Appeals and Reliefs
There is a 6 month window from the date of the valuation notice in which to appeal the valuation. During the appeal period further evidence will emerge and ‘ground truths’ established. We hope some errors can be rectified through discussion with the local Assessor before the need for formal appeal.
The appeals process is not quick but it is important, particularly considering the Scottish Government committed to retain the Small Business Bonus relief for this parliamentary session but has subsequently accepted the Barclay Review’s recommendation to evaluate the effectiveness of the scheme.
Scene 5 – The Final Scene…for now
Introducing an unplanned cost into a budget will have consequences. Those who face a bill will have to decide where to move money from to cover it and even if the valuation is incorrect they will have to pay it until discussions or a formal appeal concludes. Ratepayers may save money from other enterprises to pay their rate – will it be a salary, will rented properties miss out on a new kitchen, will a voluntary environmental project not be delivered? Or they may try to increase the pot – will visitors have to pay more to stalk, will entrance fees for tourist attractions and accommodation rise, or will residential rents be put up to market level?
The curtain is far from falling on this but as we reach this part of the process, thinking back to the policy memorandum and considering the content of the Valuation Roll we question if this policy can be deemed a success or just Much Ado About Nothing? Certainly for those who have had the expense and substantial time resource of completing forms and now must commence appeals due to the lack of groundtruth in valuation, perhaps a Comedy of Errors would be more apt?
Katy Dickson, Senior Policy Officer (Property, Business & Connectivity)