Scottish National Party (SNP) ministers are working swiftly to introduce emergency legislation following the discovery of a significant drafting error in the Non Domestic Rates (Scotland) Act. This oversight could potentially cost taxpayers up to £400 million, as it has left local councils without a legal basis to levy non-domestic rates on vacant properties for over two and a half years.
The error was identified after the Act aimed to empower councils to charge rates on unoccupied non-domestic properties. It repealed previous regulations that exempted empty business properties from rates, yet failed to address existing laws dating back to 1956. Without prompt corrective measures, the government would be obligated to refund all rates paid by property owners of unoccupied buildings since April 2023.
Estimates from the Scottish Government suggest that the refund for empty property rates from April 2023 to September 2025 could reach between £300 million and £350 million, including interest. If the refund spans the three financial years of 2023-24, 2024-25, and the entirety of 2025-26, the total could rise to as much as £400 million.
Emergency Legislation to Correct Course
Public Finance Minister Ivan McKee announced that the forthcoming Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill would permit the imposition of rates on owners of unoccupied commercial properties, effective retroactively from April 2023. This new Bill is expected to be voted on in the Scottish Parliament, known as Holyrood, within the week.
A policy memorandum accompanying the Bill indicated that no public consultation would take place due to the urgent need for remedial legislation. This decision has drawn criticism from opposition parties. Scottish Conservative Shadow Finance Secretary Craig Hoy labeled the situation “appalling,” emphasizing that Scottish taxpayers might need to bear the financial burden of this “catastrophic drafting error.”
Hoy further remarked on the SNP’s history of financial mismanagement, referencing previous controversies such as the ferries scandal and the Glasgow prison project. He expressed concerns that the government is attempting to expedite this legislative change amidst heightened scrutiny over the Labour Budget.
Government Response and Next Steps
The Scottish Government first became aware of the drafting error in August 2023, with confirmation following the next month. A government spokesperson clarified, “Subject to Parliament’s approval, this Bill will protect revenue already collected for public services by applying the necessary changes retrospectively for all levies that have been charged since April 1, 2023.”
The spokesperson assured that the new legislation would align the statute book with the Parliament’s intention to delegate empty property relief to local authorities, reflecting the operational realities of the non-domestic rates system. The swift response from the SNP indicates a commitment to rectify the issue, though the opposition remains vigilant regarding the implications for public finances and accountability within the government.
