Can changes brought about by Covid-19 amount to a material change in circumstances for the purpose of business rates appeals in Scotland


In recent months, the Scottish Government has implemented a number of Covid-19 relief schemes and grants for certain qualifying ratepayers. Most of these however, specifically target certain sectors and business types (such as retail, hospitality and leisure) and business that meet specific rateable value criteria. Consequently, for a large number of occupiers, apart from benefitting from an effective freezing of the rates poundage for 2020/21, they will not be able to rely on these reliefs or government support. For businesses such as these, lodging an appeal on the grounds of a Material Change of Circumstances (“MCC”) under section 3(4) of the Local Government (Scotland) Act 1975 may however, provide an alternative route to mitigate business rates expenses during these tough times, notwithstanding that the scope for such an appeal has been restricted with effect from 2 April 2020 due to the coming into force of the Non-Domestic Rates (Scotland) Act 2020.

Under the Local Government (Scotland) Act 1975 a party (i.e. the property owner, tenant or occupier) can appeal against a valuation at the following occasions; (1) within a fixed time following any revaluation (the most recent being 1 April 2017);(2) within 6 months of gaining a new interest in a property; (3) in the event of an error in the Valuation Roll entry; and (4) in the event of an MCC. Of these, an error appeal and MCC appeal are the only appeals which are not time restricted during the course of the Valuation Roll (the current Valuation Roll is due to expire on 31 March 2022).

An MCC in relation to property is defined in section 37(1) of the Local Government (Scotland) Act 1975. Originally, the definition was drafted broadly to include any change in circumstances which affects the value of the property. Since 2 April 2020 however, the amendments brought about by section 13 of the Non-Domestic Rates (Scotland) Act 2020 have restricted the definition of MCC to specifically exclude “any change (1) in the rent of the lands and heritages (or any other lands and heritages), or (2) in the level of valuations generally or in the value of lands and heritages generally”. Although this amendment has been interpreted as effectively excluding general economic factors from the ambit of MCC apeals, appeals can still be made on other grounds which could be of relevance for business affected by Covid-19.

Relevant factors which may be considered in an MCC appeal include those which affect a party’s ability to fully enjoy their property. This might include for example, the impact of social distancing measures imposed upon parties by the Scottish Government. In many cases, the staff capacity of commercial buildings has, and may continue to, reduce materially affecting the efficiency of a building and its value to an occupier. In light of this, notwithstanding the changes brought about as of 2 April 2020, business owners may still be able to seek business rates savings through utilisation of an MCC appeal.

Businesses who have been able to benefit from the specific Covid-19 Government support are also able to pursue an MCC appeal, however, depending on the timescale of the Covid-19 restrictions, there may be limited benefit for occupiers already receiving 100% relief for 2020/21.

What should you do?

In light of these potential opportunities, we suggest you seek the advice of your surveyor on an MCC appeal as soon as possible, and in any case before 31 March 2021 to give enough time to ascertain the options available to your business and to lodge any appeals they recommend.

We can advise and assist with introductions to a number of specialist rating surveyors who could provide further advice and lodge MCC appeals on your behalf.