Consultation on reforming the non-domestic rates system: proposals, the draft valuation roll, content of valuation notices, etc.

Regulation 3 – Sending documents by electronic communication
• We support the use of electronic communication, wherever possible.

Regulation 5 – Proposal Requirements
• There is a new onus on the appellant to provide a substantial amount of information at the proposal stage in order for ratepayers to submit a complete proposal and to allow for the potential to move to an appeal. This is an onerous requirement at this stage, particularly in respect of revaluation appeals. Whilst we appreciate that the assessors would benefit from being able to understand the grounds of the proposal we would suggest that there should be no requirement to include detailed evidence and a statement to support the grounds at this stage. The requirement as proposed leverages all pressure on to the appellant and represents a significant change to current practice.
• The proposed regulations fail to recognise that the vast majority of ratepayers in Scotland are represented by professional advisors. We are aware that advisors deal with a substantial number of clients and vast property portfolios. We believe that it will be extremely challenging under the proposed regulations for our advisors to adequately represent us and act in accordance with the requirements of their professional bodies - the Royal Institution of Chartered Surveyors (RICS), the Institute of Revenues Rating and Valuation (IRRV) and the Rating Surveyors Association (RSA). In order for our agents to represent us in a manner that enacts our rights to a fair review of our rateable values, we believe that the proposed Proposal Determination Date (PDD) should trigger statutory information sharing timescales between the parties, including the provision of the proposer’s detailed grounds of appeal. The requirement for all information and detailed evidence to be lodged at the proposal stage will widely prejudice our (the ratepayers’) ability to access the rating system and result in widespread unfairness and disadvantage.

Regulation 6 – Incomplete Proposals
• 6(1) – we contend that the word “must” be removed and be replaced with “may”. This gives the opportunity for any queries found within a proposal to be considered and rectified where possible without the need for formal review. An option that is explored in 6(3)(b)

Regulation 7 – Acknowledgement of appeal
• The assessor is only required (no later than 70 days before the PDD) to provide, in response to the Proposal, the basis on which the entry in the valuation roll is arrived at. We believe that this could lead to a lone generic statement to a proposal, solely regarding the basis of valuation. This is in vast contrast when compared to the requirements placed on an appellant when submitting a complete and competent proposal.

Regulation 10 – Information to be provided by assessor and proposer
• The requirement for the assessor to provide a written statement setting out the basis of his valuation must be before detailed grounds are required. The assessor should be required to provide more than just a “written statement setting out the basis for the terms of the entry in the valuation roll…”. The assessor should be required to provide the same level of information that is required to be provided by the appellant when making a proposal.

Regulation 11 – Information to be provided to the proposer
• No comments on the existing (1) and (2).

Regulation 12 – Provision of additional evidence by the proposer
• 12(2) – the phrase “does not exist at the time of the proposal”, should be amended to “that was not known at the time of the proposal”
• (2) and (3) – we contend taking out the word “may” and replacing with “should”. This is more definitive.
• (3) – If the additional evidence was not provided previously, but was in existence at the time and not known to the proposer, then it should be considered as pertinent to be included within the proposal. This right should extend to both parties without the need for agreement from the other. The assessor should not be allowed to exclude any evidence, it goes against the principles of fairness and transparency set out in Barclay.
• (4) – the requirement of only 14 days from the assessor’s written statement, to introduce new evidence as the proposer is too restrictive and should be extended to 28 days.

Regulation 13 – Postponement of decision on proposal
• This section lacks parity and falls too heavy in the favour of the assessor. If the right to postpone the PDD remains in legislation, this ability should also be extended to the proposer.

Regulation 15 – Notice of decision on a proposal
• The draft proposals don’t go far enough to protect the ratepayer should the assessor fail to issue a decision on a proposal. There is a 14 day period to appeal where the assessor has failed to make a decision, this could lead to situations where the assessor deliberately fails to issue a decision as the 14 day period doesn’t give sufficient time. There should be consequences in place where the assessor does not make a decision, for example, the proposal is automatically accepted.
General Points of Observation

The draft proposal and appeal procedures do not reasonably address the existing processes which have been in place for a number of Revaluations. There may be imperfections in the current system but our concern is that the regulations as drafted would replace a system that is not perfect, but by no means broken, with one that will quickly prove to be unfit for purpose.

One of the Barclay recommendations states that, 'Reform of the appeals system is needed to modernise the approach, reduce appeal volume and ensure greater transparency and fairness'. We fail to see how the draft proposals, if implemented, would come close to meeting the aims of this recommendation. Further reducing the appeal volume should not be achieved by making the appeal process more onerous and complex, of which the new proposed system is.

It is recognised within the consultation policy background that the vast majority of appeals are currently settled amicably between the assessor and the appellant. This confirms that the appeal procedures as currently exist work well and there is no justification to change the established procedure. The only requirement, which is entirely recognised as necessary, is that the timeframe for disposing of revaluation appeals needs to be adjusted in line with the move to 3 yearly revaluations. It is submitted that this shortened timeframe can be readily achieved through the proposed proposal stage and the setting of PDDs by the assessor without the requirement for the proposer to provide all the information in support of the proposal at the time of submission. As the Regulations are drafted, we are concerned that this will only have the effect of forcing ratepayers delay making proposals until the very last opportunity and this cannot be a desired outcome and will create greater administrative and time pressures on all parties involved.

There is serious concern regarding the seven legislative requirements as set out in the requirements for a valid proposal in Regulation 5(1)(d), it is unlikely that any unrepresented lay ratepayer would be in a position to comply with the requirements for lodging a proposal, this is simply wrong. It should also be considered that not all ratepayers will have the same opportunities to contest their rateable values, which is their right, as they will not have the resources. The new system is almost discriminatory to small businesses and those who do not possess the knowledge of the rates system and proposed requirements.

We urge the Scottish Government to avoid the route of referring to any appeal as speculative – to do so could be perceived as prejudicing the ratepayer before an appeal is ever considered. It is every ratepayers’ right to challenge their assessment at the appropriate time and the appeal process protects this right. To call any appeal speculative is concerning considering that, to date, almost 1 in 3 assessments have been amended post disposal.

The Scottish Government should consider a phased approach to the introduction of any new Regulations to make the process as smooth as possible. With everything changing at once, for all, there risks the potential for any unforeseen issues to also come to a head at once.

The new legislative changes and number of amendments are substantial. We would suggest that a more appropriate action would be to issue new consolidated NDR legislation in order to avoid confusion when jumping between historical referenced statutory instruments. In turn, this would align with the Barclay review’s recommendation of modernising the rates system moving forward.

It is a continuing feature of these consultations that the SG is concerned by the number of appeals made against assessments appearing in the valuation roll. The need for transparency has been highlighted by ratepayer representatives and trade organisations. Under the proposed system the only way a ratepayer will be able to obtain relevant detail as to how their valuation is arrived at is by lodging a proposal. Only when a ratepayer has submitted a proposal with all of the evidence that they have available is the assessor required to respond with corresponding information detailing the evidence upon which their valuation is based. If this information were made available to the ratepayer earlier in the process, then the number of proposals and appeals would fall significantly.

With regards to the complexity of the proposal system and associated timelines, a recommendation of the Barclay review was “to seek to ensure that the administrative systems and processes surrounding the rates system are as simple and straightforward as possible”. The proposed system simply does not support this recommendation; we suggest a more informal system that allows for negotiation and free exchange of information. “A further general view among ratepayers is that stability and certainty are important and that radical ideas could lead not just to uncertainty but also potentially to significant shocks to the rates system, both to ratepayers and Government revenues.” The new regulations are radical and definitely impact the stability of the appeal process, directly contradicting the quoted outcome from Barclay.

In summary it is our view the draft Regulations are not fit for purpose, incompatible with the purpose of the Roll being maintained fairly and accurately and prejudicial to ratepayers’ abilities to check and challenge their rating assessments properly and without onerous conditions. It is submitted that the proposal and appeal procedure is capable of functioning under a compressed time schedule without the need to impose impractical burdens on the ratepayer at the proposal submission stage. This unduly complicates the system and is contrary to the recommendations and key principles of the Barclay review, notably in delivering fairness and simplicity. It prevents access to justice for ratepayers and fails to recognise that the existing system has functioned well with the vast majority of appeals being settled amicably. The new system of 3 yearly Revaluation cycles should be given time to operate and succeed within the remit of the existing system, less detailed proposals can be lodged initially before detailed grounds are required after initial negotiations have taken place.

We would like to reiterate the suggestion of the creation of new/fresh, redraft of NDR legislation. There are several new legislative changes and the number of amendments to legislation could cause greater confusion when referencing historic pieces of legislation and their respective amendments. In order for the system to be fair and transparent for all, including lay ratepayers, the legislation should reflect these principles by ceasing from referencing historical pieces.

Regulation 2 – Amendment of the principal Order

• It is submitted that a ratepayer should be entitled to lodge an appeal on the basis of error (section 2(1)(f) of the Act) at any time whilst the Roll is in force, in the same way as currently exists. The whole basis of an “error” appeal is that the entry is in fact “incorrect”. Therefore, to limit an error appeal to 31 July in the year of revaluation or 4 months after the date of a valuation notice is unfair. Any error should be corrected and challengeable at any time.
• Removal of “Alleged” – The word alleged should be removed as it suggests that the appeal may not actually be an MCC, already questioning the integrity of the MCC proposal. We suggest the wording should mirror phrasing in current legislation.
• MCCs – the very nature of an MCC is that it is material and affects value and case law has dictated throughout the years that it cannot be too transient. Restricting MCCs to 4 months is unreasonable, certain MCCs cannot be substantiated within a 4-month period. Further, it is likely to encourage more MCC proposals to be made to ensure a ratepayer’s interests are protected.
• We contend that the draft Regulations allows for the assessor to have too much time to issue a decision on a proposal. The 30th of June 2025 is too late. In theory assessors could sit on the proposal for up to 2.5 years. We suggest that the assessor should issue a decision on a proposal within 12/18 months of it being made.
• The 14-day time limit to appeal an assessor’s decision is too restrictive, 14 days is not enough time, it doesn’t allow for reporting to client, possible holidays, etc. There is significant risk that the Tribunal service will be overwhelmed. The proposer could feel forced to lodge an appeal as there may not be enough time to make appropriate contact, contemplate, consider, and take instruction from client. We suggest that 21/28 days is more appropriate.
• Where a proposal has been accepted but no PDD issued – Every proposal should have a PDD. This part should be removed. assessor should recognise that if a proposal is “accepted” and “complete” that must warrant a PDD, there should be no exceptions.

Regulation 1 – Citation, commencement and interpretation

• We would like to reiterate the suggestion of the creation of new/fresh, redraft of NDR legislation. There are several new legislative changes and the number of amendments to legislation could cause greater confusion when referencing historic pieces of legislation and their respective amendments.
Regulation 3 – Form of valuation notice

• The Barclay review confirmed that the assessor should include the reason for the issue of the Valuation Notice. We also contend that the assessor should also include a copy of his full and detailed valuation of how the RV was arrived at.

Section 4 – Time limits for making a proposal

• Replace the word alleged with considered.

Section 5 - Time limits for bringing an appeal

• We reiterate that 14 days is too tight a timeframe to lodge an appeal. We suggest 21/28 days as an alternative.

Section 6 – Time limit for bringing and appeal where no proposal determination date has been set

• If assessor accepts a proposal as complete, then they should be in a position to set a PDD.

Section 7 – Power of assessor to change a valuation roll before roll comes into force

• 7(b) – If a proprietor agrees a value, can other parties with an interest lodge a proposal. For example, if a shopping centre is pre-agreed by the landlord would the tenants still be able to lodge a proposal. An agreement between one party and the assessor should not prejudice any other ratepayers’ right to lodge a proposal.
• 7(e) – This should be removed as it is not necessary.

• The draft regulations confirm the additional requirements to be included within the valuation notices of some ‘bulk’ class properties such as standard shops, offices and industrial properties. The assessor has to include the addresses of properties whose rental information has been considered when setting the rateable value of the subject property. It is imperative that assessors are transparent with how they have arrived at the valuation. Details of let properties from which the basic rates have been derived is undoubtedly crucial, however, we strongly believe that a list of addresses on its own is meaningless. This list must be supported by corresponding rental analysis. Without this the additional burden on a ratepayer to seek and analyse evidence from the assessor’s comparables as well as carrying out all the work necessary for submitting a proposal, all within a period of 4 months, is simply not achievable.
• Lists of comparable properties only apply for bulk classes, all subjects valued using a comparative approach should have the full list of rental comparisons and evidence included with the issue of the Valuation Notice. This information only being made available to “bulk class” subjects is unfair to ratepayers occupying all other categories.

• We contend that referring to the Use Class Orders is flawed; the assessor does not always consider the planning use class when determining how to value specific properties. We suggest existing descriptions should be used by assessors

• Some information used in valuations is commercially sensitive, turnover information as an example should not be included with Valuation Notices. As mentioned previously Notices should state the specific section of the 1975 Act (as amended), that the assessor has founded upon to alter to the Valuation Roll.

In conclusion, it is submitted that the proposal and appeal procedure is capable of functioning under a compressed time schedule without the need to impose impractical burdens on the ratepayer at the proposal submission stage. This unduly complicates the system and is contrary to the recommendations and key principles of the Barclay review, notably in delivering fairness and simplicity. It prevents access to justice for ratepayers and fails to recognise that the existing system has functioned well with the vast majority of appeals being settled amicably.

We trust the enclosed response clearly sets out our position and will be fully and appropriately considered by the Local Government and Communities Committee, as part of the next phase of consultation and scrutiny on this matter. Should you require additional information, clarification or further discussion or submissions please do not hesitate to contact us.