MSPs pass emergency Bill to fix £400m rates law error

MSPs have passed emergency legislation to avoid a £400 million bill from businesses.

It comes after an error from previous legislation could have seen firms ask for refunds for rates they did not legally have to pay.

Due to the mistake, owners of up to 34,000 unoccupied properties could have claimed back Non-Domestic Rates (NDR) on their properties backdated from April 2023.

Ministers had intended that the Non Domestic Rates (Scotland) Act 2020 would give councils powers to charge rates on vacant non-domestic properties.

This repealed previous legislation which states no rates were payable on empty business properties – but the Act failed to take account of previous laws dating back to 1956.

On Thursday, Holyrood voted through the Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill, which rectified the error, by 86 to 24 votes.

Without the new legislation being passed by Holyrood, rates paid by owners of empty properties since April 2023 would have to be paid back to them.

The Scottish Government had said the cost of refunding businesses could amount to up to £400 million.

Non-domestic rates, sometimes called business rates, are set by ministers at Holyrood and are based on the rental value of properties including shops, offices and factories.

Ahead of the vote, public finance minister Ivan McKee said the Bill was necessary to ensure councils did not receive an “unexpected and unjustified” refund demand from local businesses.

He added that it was “vital” to protect public finances.

Tory MSP Craig Hoy said his party could not support the “rushed” Bill because they doubted whether it would work, describing it as “bad legislation”.

He added: “The disastrous drafting blunder in the SNP’s original legislation could leave Scottish taxpayers picking up a compensation tab of anything up to £400 million.

“Despite ministers being made aware of this enormous error in June, it’s taken them almost six months to present parliament with emergency legislation designed to fix it.

“But the SNP Government have not provided us with evidence this week that their emergency Bill will work.

“It seeks to change the law to make businesses retrospectively liable for rates that they were wrongly billed for originally.

“This change makes the prospect of a legal challenge much more likely.

“Firms who were wrongly charged may well drag the Government through the courts contesting the change.

“And the nationalists’ track record on defending their legislation in court, from Nicola Sturgeon’s independence referendum Bill to gender self-ID, does not inspire any confidence.

“For that reason, the Scottish Conservatives cannot support the SNP’s emergency legislation.”