5.The purpose of the Act is to reverse a repeal made in error by the Non-Domestic Rates (Scotland) Act 2020 (“the 2020 Act”) in relation to liability for the payment of non-domestic rates for unoccupied properties. The Act establishes the position in law, with retroactive effect from 1 April 2023, whereby liability for rates in respect of unoccupied properties falls on their owner, subject to any reliefs that local authorities or the Scottish Ministers may choose to put in place under existing discretionary powers.
6.Non-domestic rates are a property tax based on the rateable value of a property. The legislative framework for non-domestic rates in Scotland is complex, having evolved over many decades with numerous piecemeal amendments and limited consolidation.
7.Section 24of the Local Government (Scotland) Act 1966 (“the 1966 Act”) had previously provided for a general rule that no rates were payable for unoccupied properties, with a power for the Scottish Ministers to levy a reduced level of rates on the owners of such properties – but section 24 was repealed by the 2020 Act with effect from 1 April 2023. Since this repeal there has been no legal basis to levy non-domestic rates on owners who are not in occupation.
8.This is because the existence of section 16(1) of the Valuation and Rating (Scotland) Act 1956 (“the 1956 Act”) was not taken account of when section 24 of the 1966 Act was repealed. That provision states that every rate levied by a rating authority is payable by occupiers only, and that any statutory reference to a rate payable by owners is to be interpreted accordingly. As a result, express statutory authority is needed to impose liability on the owners of properties to pay non-domestic rates.
9.At the time the 2020 Act was passed by the Scottish Parliament, it was believed that repealing section 24 of the 1966 Act – which had stated that “no rates shall be payable in respect of lands and heritages which are unoccupied” – would restore a default position whereby owners would be liable for empty properties. But the effect of section 16 of the 1956 Act was overlooked.
10.The intention behind the 2020 Act had been to devolve empty property relief to local authorities, but the repeal of section 24 of the 1966 Act inadvertently removed the legal basis for levying rates on the owners of unoccupied properties. Therefore the Act gives effect to the intention of the Scottish Parliament in enacting the 2020 Act, while bringing the legislative position into line with the (mistaken) understanding of councils, ratepayers and commentators (see e.g. Armour on Valuation for Rating, para 14-12 (R.37 August 2024)) during the period between the coming into force of the 2020 Act and the introduction of the Act.
Overview of the Act