The Scottish Government’s flagship Land Reform (Scotland) Act 2016 reintroduced rates on shooting land, with amounts payable from 6th April 2017. Curiously, this date was upheld by politicians, even once it had passed – with the government having no clarity over how it was going to implement this new tax. As such, we have seen the unsatisfactory situation of land owners accruing rates over the last 6 months without knowing how much was due, or on what basis it was to be calculated.
The District Assessors have had the unenviable task of collating huge amounts of data on thousands of sporting land holdings throughout Scotland. This has included information on financial performance, historical bags and birds released, and was conducted to help establish an equitable basis for calculating sporting value.
This line of enquiry had suggested the Government might avoid a simple acreage basis, which could be rather blunt and unlikely to factor in the quality of the land or the intensity of the shooting undertaken. Under such a regime, occupiers would be taxed on the sporting potential, even where they had intentionally chosen not to engage in shooting. Alternative methodologies are equally problematic. Valuations based on historical bag rely on the accuracy of shooting returns and are subject to natural fluctuations, while deer forest returns can be influenced by non-sporting cull activities. While the area system is rather crude, other methodologies were always likely to be overly complex and compounded by the District Assessor losing its knowledge base of sporting valuations when the previous Sporting Rates regime was withdrawn in 1995.
Finally, we have clarity. It is our understanding that a methodology will be announced this week and assessments will be posted within a matter of days. The assessment will be based on a hectare basis and assessed on a simplified land classification. This will differentiate deer forests from shooting land and it is our understanding that rates will be £2/ha for deer forests. Shooting land will range from £3.50 (grassland), £4 (arable) to £5 (farmland with woods as well as commercial forestry). As such, the majority of Scottish farmland will be subject to assessment regardless of shooting activity.
As with existing, non-domestic rates, this value will be multiplied by the poundage rate, which is currently £0.466. We also understand that the current small business exemption will apply and is likely to remove most shoots from the scope of rates altogether, although existing rateable properties such as commercial buildings will contribute to towards this threshold.
As an illustration, and based on the indicative rates above, it would require around 18,000 acres of standalone deer forest to breach the small business exemption – currently rateable property of less than £15,000. It is worth noting that, while details are yet to be published, there will be a mechanism for reducing the headline rates for larger parcels of land.
Time will tell if shooting rates will lead to job losses; even large shooting operations often operate on a marginal basis. Meanwhile, many people within the shooting sector had feared rates directly attached to the shooting activity would lead to land being withdrawn for this purpose. Indeed, this thought process has already led to some sporting tenants losing their land as overzealous landowners sought to pre-empt the moves of the District Assessor. However, while it may seem counter-intuitive, the proposed rates methodology may actually have the opposite impact and may incentivise landowners to exploit the commercial potential of otherwise underutilised shooting ground, on which they are paying shooting rates regardless.
A bone of contention in rateable values for deer forests has been the mechanism in the Land Reform Act which states, “regard may be had to such factors relating to deer management as the assessor considers appropriate”. As such, it was suggested that rates could be reduced where the rate payer could demonstrate deer were managed for environmental benefit. Whether the District Assessor has the necessary expertise or willingness to open this can of worms would seem unlikely. Even the most commercial sporting estates generally adhere to local deer management plans, suggesting ‘responsible’ management. Meanwhile, where the Government deem this is not the case, they have the power, indeed duty, to impose control orders under the Deer (Scotland) Act 1996. Consequently, this legislative mechanism is not considered for use at this time and would be more relevant to historical bag-based valuation methodologies.
One thing that is inevitable is that a large number of appeals will clog up the process for the foreseeable future and the ‘devil in the detail’ will only emerge as the appeals process takes its course. Meanwhile the only people predicting a net tax take for this tax regime are the politicians responsible. A burdensome tax that doesn’t raise a penny is hard to justify and politicians may have to face up to this fact, once the debate is informed by historical tax take. As such, the current broad-brush methodology may end up being a temporary fix, being the only workable option in the timescale available. In the future, the approach may be revisited, refined and more targeted.
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Head of Rural Estates