Owners of hydro electricity generating schemes and other renewable energy installations are likely to have received an unwelcome, and perhaps unexpected, demand for business rates from their local authority.
Earlier this year, the Scottish Government announced its intention to reform its Renewable Energy Relief Scheme from April 1, 2016 by restricting relief to schemes incorporating community ownership. The scheme previously provided for 100% relief from business rates for rateable values up to 145,000 with a sliding scale of relief for larger subjects and consequently this was a significant benefit to many renewable energy operators.
The removal or revision of a fiscal relief does not constitute a Material Change in Circumstances (MCC) that would allow a valid appeal to be made to the assessor against the valuation.
Therefore, there is little that can be done to seek review of the valuation upon which the rates assessment is calculated.
There are very limited circumstances where a valid appeal against an entry in the roll can be made. The principal circumstances giving rise to a valid appeal are within six months of acquiring an interest in a property (either as proprietor or tenant), or where the valuation in the roll has been altered, or where there is a valid MCC. The other opportunity is following a general revaluation - and it should be noted that a revaluation is scheduled to take effect from April 2017.
Rating appeals in respect of the previous revaluation are largely dealt with. However, there is a live case relating to the valuation of small hydro schemes.
The principles underlying the case are complex but in summary a number of proprietors of run-of-river hydro schemes challenged the valuation methodology adopted by the assessor before the Valuation Appeal Committee for Tayside, who found in their favour. The assessor appealed against this decision to the Lands Valuation Appeal Court on the basis that the committee had erred in law in their interpretation of the statutory order relating to the valuation for rating (plant and machinery) and the court found in favour of the assessor, quashed the committee's valuations and remitted the matter back to them for further consideration.
Notwithstanding the earlier comments in respect of the ability of a ratepayer to lodge a valid appeal at this stage of the revaluation process, there may be a glimmer of hope for renewable operators within the hydro sector. If the Valuation Appeal Committee - having reviewed the court's judgement and considered the arguments presented by the parties - continues to find in favour of the ratepayers, that would be a relevant decision allowing other ratepayers to appeal on the basis of an MCC, at least within Tayside.
Of course, the door would be open to allow the assessor to lodge a further appeal to the Lands Valuation Appeal Court if he considers the committee has erred in law. It seems unlikely at this stage that a final decision on this matter will be forthcoming for some time.