Another tax cloud is looming on the financial horizon for the Scottish renewable energy sector on top of decreasing incentives and support, according to an industry expert at CKD Galbraith, the leading independent property consultancy.
A UK-wide property revaluation for business rates purposes has been undertaken and is due to come into effect in April 2017
Though some categories of property appear to have fallen in value, generally reflecting a decline in occupier demand post-recession, owners and operators of hydro schemes and wind turbines should brace themselves for an unwelcome shock.
Revaluation usually occurs every five years, enabling the Government to ensure that the burden of business rates reflects changes in the property market. This task is the responsibility of the Valuation Office Agency in England and Wales and the Assessors in Scotland and whilst there is separation in responsibility, efforts are made to harmonise the valuation approach.
For political reasons the revaluation scheduled for 2015 was postponed and it is therefore seven years since the last revaluation. All properties are reassessed having regard to changes in the market over the intervening period and the new rateable value is used to calculate the rates bill by application of a formula known as ‘poundage’ or ‘multiplier’.
Calum Innes, a Partner with CKD Galbraith and an expert in rating matters, commented:
“Many of our clients are facing a significant increase in liabilities with respect to business rates as – in some cases – valuations have increased in excess of 400%.
“Up until April 2016 the Scottish Government provided 100% rate relief in respect of smaller renewables as part of the general support for low carbon technologies.
“But this was removed and the situation has now been compounded by many operators facing a huge increase in rates liability with there being no transitional relief to cushion the blow.
“The regulations provide an opportunity for owners and occupiers to appeal their valuation for a limited period following 1 April and as the draft valuations have already been published online by the Assessor, we would suggest that operators of renewable installations should review this information to inform future budgeting.”