The Act: an Overview
3.Non-domestic rates are a property tax based on the rateable value of a property. Rateable values are based on net annual value: that is, the annual rental value that a property would attract in an open market. Rating valuations are carried out by independent Scottish assessors. Rateable values are periodically updated at revaluations, the most recent one being on 1 April 2017 based on rental values as at 1 April 2015, and the next set to take place on 1 April 2023 based on rental values as at 1 April 2022. It is at revaluations that rateable values are updated to reflect changes in the general level of rents including those caused by economic factors.
4.Outside of revaluation, net annual values and rateable values can be amended to reflect a “material change of circumstances”, as defined in section 37 of the Local Government (Scotland) Act 1975. This includes for instance physical alterations to the property (e.g. extension or demolition); major, localised and impactful alterations in the area such as the Edinburgh Tram Works; and relevant decisions by the Valuation Appeal Committee, Lands Tribunal for Scotland or Lands Valuation Appeal Court. This definition was amended with effect from 2 April 2020, under the Non-Domestic Rates (Scotland) Act 2020, to exclude changes in general economic circumstances: specifically, changes in the rent of particular lands and heritages or any other lands and heritages; or in the level of valuations generally; or in the value of lands and heritages generally.
5.However, following the outbreak of COVID-19, according to data provided to the Scottish Government by assessors, approximately 40,900 properties had a material change of circumstances appeal lodged in respect of them in relation to financial year 2019-20, and 37,000 properties in relation to 2020-21, in connection with the impact of COVID-19, or COVID-19 restrictions. This could potentially have a substantial impact on the level of rateable values across a wide range of properties and sectors ahead of the next revaluation.
6.Accordingly, the Valuation and Rating (Coronavirus) (Scotland) Order 2021 (S.S.I. 2021/445) was made on 30 November 2021 and came into force the next day. The Order specifies that in calculating the rateable value of any properties in the 2017 valuation roll after the instrument comes into force, no account can be taken of any matter arising on or after 1 April 2021 that is directly or indirectly attributable to coronavirus. The purpose of this Act is to extend this rule to cover both net annual value and rateable value and to cover the period back to 2 April 2020 (the date on which the Scottish Government amended the definition of “material change of circumstances” to exclude changes in economic circumstances.) The extent of this retrospective application would not have been possible using existing powers to make subordinate legislation.