The Herald had this exclusive report on Saturday:
New pub rates are ‘lunacy’, claim publicans and hoteliers
The newly refurbished Press Bar in Albion Street, Glasgow.
THE method used to calculate business rates for licensed premises has been slammed as “manifestly unfair”, as new anger erupts over the size of bills facing hundreds of pubs and restaurants following the 2017 revaluation of non-domestic properties, Scott Wright reported in the Herald on Saturday morning.
Fresh controversy emerged this week over the use of turnover to calculate rates bills for hospitality outlets – a year after a campaign in The Herald revealed the huge cost burden the latest valuations are having on the sector. Marco Giannasi, owner of the renowned Battlefield Rest restaurant in Glasgow, has gathered hundreds of signatures for a petition protesting his property’s revaluation, which will lead to his annual rates bill rising by as much as £27,000. The Scottish Government introduced an emergency 12.5 per cent cap on increases in rates payable in the immediate aftermath of the campaign, which highlighted that many bars, restaurants and hotels had seen their rateable values climb by as much as 400%. Ministers have since unveiled a series of recommendations to reform the system, however these do not include ending the practice of using turnover to calculate the rateable value of licensed premises. Practice notes for calculating the rateable value of licensed premises, available on the website of the Scottish Assessors Association, advise that property values should be set at a rate of 8.5% of the business’s hypothetical achievable turnover (HAT) – for all licensed outlets.
Veteran chartered surveyor Douglas Lambie, an associate a property firm Ryden, said the turnover model is unfair because it does not take into consideration the variation in costs different outlets face. Two outlets could have the same level of turnover but wildly differing levels of profitability, he said, claiming that under the current system operators can be punished for seeking to improve their businesses by investing in skilled staff, high quality food and entertainment. Mr Lambie, whose clients some of the biggest names in the hospitality sector, branded the scheme as the “worst he has come across in 33 years as a chartered surveyor”.
Publican Harry Hood, the former Clyde and Celtic footballer, added his voice to the criticism of the turnover model, stating that it disadvantages the licensed trade compared with other sectors such as retail, where rental values are used. He said the massive hikes many operators are facing compound the pressure brought by increases in the national minimum wage and auto-enrolment pension contributions. Family-run Lisini Pub Company, which is run day to day by Mr Hood’s family, employs more than 300 staff at outlets such as Angels in Uddingston. The rate-able value of each of its four premises has risen “substantially”.
Mr Hood said: “It’s £240,000 extra [in our rates bills], but I also have to pay more in pensions. They don’t account for the number of people you employ. We will have to find another £400,000 a year between pensions, wages and rates.”
Meanwhile, the length of timing it is taking for appeals to be heard under the 2017 revaluation is causing major concern. It emerged on Thursday that more than 73,000 business owners across Scotland are still waiting for the verdict on their appeals.
Assessors in Glasgow are due to hold their first appeals meeting for licensed premises next month. Mr Lambie said assessors are likely to stand by the 8.5% formula. “There will be winners and losers,” Mr Lambie observed.