Non-Domestic Rates (Coronavirus) (Scotland) Bill: partial business and regulatory impact assessment - partial

Partial business and regulatory impact assessment (BRIA) to consider the impact of the Non-Domestic Rates (Coronavirus) (Scotland) Bill.

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Purpose and intended effect


Non-domestic rates, sometimes referred to as business rates, are a property tax based on the rateable value (RV) of a property. Rateable values are derived from net annual values (NAVs), which are based on the annual rental value that a property would attract in an open market. Rating valuations are carried out by independent Scottish assessors and rateable values are periodically updated at revaluations taking into account changes to general market conditions. The most recent valuation was on 1 April 2017 based on rental values as at 1 April 2015.

Appeals against a property's rateable value on the grounds that there has been a "material change of circumstances" (MCC) since the entry was made may be submitted at any time, and up to 6 months after the valuation roll ceases to be in force. The Local Government (Scotland) Act 1975 includes a definition of MCC which was amended with effect from 2 April 2020, by the Non-Domestic Rates (Scotland) Act 2020, to exclude changes in general economic circumstances.

Scottish Government analysis of data provided to the Scottish Government by Scottish assessors shows that, approximately 49,400 unique properties with a total RV of £3,929 million have lodged an appeal since the outbreak of the coronavirus pandemic. It is likely given the timing of these appeals and the atypical spike in appeals at this point in the valuation cycle, that the majority of these appeals were lodged as a result of the coronavirus pandemic. Successful appeals equate to reductions in RV and therefore most likely in non-domestic rates liabilities as well (though if a property is in receipt of 100% relief for instance, the rates bill would already be nil).

On 25 March 2021 the UK Government committed to ruling out COVID-19 appeals on non-domestic properties in England. It introduced the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill to implement this commitment with retrospective effect, and following a request from the Welsh Government and amendments tabled in the House of Commons, this was extended to Wales as well as England. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 received Royal Assent on 15 December 2021.

In Northern Ireland, to similarly prevent matters attributable to coronavirus being taken into account, the Non-Domestic Rates Valuations (Coronavirus) Bill was introduced on 15 November 2021.

The Scottish Government announced on 23 June 2021 that it intended to take similar measures to rule out COVID-19 appeals in Scotland on the basis that changes to general market conditions should only be taken into account at revaluations.

The Valuation and Rating (Coronavirus) (Scotland) Order 2021 (S.S.I. 2021/445) was approved by the Scottish Parliament on 24 November 2021 and came into force on 1 December 2021. The Order clarifies that, in calculating the RV of properties in the 2017 valuation roll, no account can be taken of any matter arising on or after 1 April 2021 that is directly or indirectly attributable to coronavirus. Physical changes are excluded.


Primary legislation is required to extend prior to 1 April 2021 the period during which the effects of coronavirus cannot be included in the matters that can be taken into account when determining NAVs and/or RVs; as well as to cover NAVs in addition to RVs. The Non-Domestic Rates (Coronavirus)(Scotland) Bill clarifies that, in calculating the NAV or RV of properties in the 2017 valuation roll, no account can be taken of any matter arising on or after 2 April 2020 that is directly or indirectly attributable to coronavirus, this date corresponding to the date the Scottish Government amended the definition of MCC under the Non-Domestic Rates (Scotland) Act 2020.

Rationale for Government intervention

The Bill aims to deliver fairness to all ratepayers. The Scottish Government supports the principle that market-wide economic changes, including any potentially caused by COVID-19, should only be considered at revaluation.

The Scottish Government's National Performance Framework sets out a clear purpose for Scotland – to focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth. Non-domestic rates have a key role to play in delivering sustainable economic growth and this Bill will help contribute to this overarching purpose, as well as the national outcome to have a globally competitive, entrepreneurial, inclusive and sustainable economy.

In the absence of case law, it is not known whether any impact of COVID-19 could be deemed a MCC. It is therefore assumed that these appeals could potentially impact on the level of RVs across a wide range of properties and sectors. The Bill will provide certainty for ratepayers, assessors and rating agents, and contributes to mitigating the risk to limited public resources should such appeals be successful.



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