The new rates cap of 12.5% for office premises in Aberdeen is unlikely to have as big an impact as hoped on businesses in the city, with the four highest value offices set to miss out on the cap, according to a leading expert.
Tony Rosenthal, Head of Cushman & Wakefield’s National Rating Team in Scotland, claims that the four largest office premises in the city totalling £17,680,000 of rateable value will only save approximately £35,000 in total thanks to the new relief announced by the SNP.
According to Rosenthal, Shell’s Headquarters on Altens Farm Road will not benefit at all as its new business rate bill is only increasing by 6.97%, reflecting an increase in annual rates payable from £2,488,800 to £2,568,240 due to the revaluation.
Aker Solutions premises in Aberdeen International Business Park which is up 12.04%, an increase in rates payable of £167,000 will also miss out on the relief.
BP North Sea, in Wellheads Avenue will save just £11,685, compared to an increase in rates payable of £148,000, with their rateable value increasing by 13.2%, meaning the relief cap doesn’t impact as greatly as may have been publicised by Mr Mackay.
Wood Group PSN in City Park 1 will save a more substantial £22,755, however, they too will see an increase in rates payable of £154,000 even after the cap is applied.
In addition he warns that many companies in Aberdeen could face securing no benefit at all as the new reliefs announced by Derek Mackay are subject to European State Aid rules which caps relief at 200,000 Euros over a three year rolling period.
He explained: “Given the nature of the businesses in Aberdeen and their European locations I would assume that state aid may have been claimed on other parts of the business, as it doesn’t just apply to business rates.
“On the smaller offices, the 200,000 Euros cap won’t always be breached, however working on the assumption above, if the businesses have claimed state aid elsewhere they will not benefit at all from the 12.5% cap announced this week and will have to pay the full increase.”
In some cases the full increase is as much 40% according to Tony, who cites the example of Prime Four Business Park which will see its rateable values increase by 41%. Many tenants on the park will be due in excess of the 200,000 Euro state aid limit and as such won’t reap the full reward of Derek Mackay’s new relief.
Should state aid have been claimed by these businesses elsewhere, they will in fact feel the full impact of the 41% increase come 1 April this year.
However Tony says that businesses, not just those in the north east but across the country, who are unhappy with their valuations can appeal but must do so before September 30th.
More than 225,000 office, shops and industrial buildings across Scotland will receive their new rateable valuations from which business rates are calculated through the post in March, although they can find out what they will pay now by checking the Scottish Assessor’s website www.saa.gov.uk
Tony said: “Businesses and retailers, particularly those with multiple premises, really should act now and talk to a valuations expert who will be able to advise them on the merits of appealing their valuations and how to go about doing that.
“While the majority of the valuations will be fair and reasonable, there will be a significant number which can be successfully appealed. The message to businesses is not to panic if something seems obviously wrong.
“Even if the bill goes down it may still be in your interests to query it - we are hearing retailers who have been delighted to see their rates drop by 20% only to find that the store next door has fallen by 30%. It is always worth a quick consultation with a valuation expert even if there has been a drop – sometimes you really should look a gift horse in the mouth.”
However Tony cautions that there is no quick fix – the appeals can take up to three years to be resolved although refunds will be back dated.
He said: “That doesn’t really help cash flow for businesses suffering at the time and we advise that advice is taken at an early stage.”