The Scottish Government

SMALL BUSINESS BONUS SCHEME 2008-09 IMPLEMENTATION ARRANGEMENTS:

GUIDANCE FOR LOCAL AUTHORITIES

1. The Small Business Bonus Scheme will replace the Small Business Rates Relief Scheme with effect from 1 April 2008. This guidance is intended to assist local authorities by providing a clear statement on the implementation arrangements for the new scheme.

Eligibility for the Scheme

2. The Small Business Bonus Scheme is intended to provide relief for each of Scotland's small businesses with properties which have a combined rateable value of £15,000 or less. The £15,000 upper limit was deemed to represent the best balance between affordability and helping the largest number of businesses which would benefit the most.

The relief for a particular property is calculated by multiplying the percentage for the combined rateable value of all business properties in Scotland by the rateable value of the property.

Exact level of relief to be awarded

3. The exact level of relief for each business will depend on:

3.1 the combined rateable value of all properties in Scotland of which the business is in rateable occupation or (if vacant) which the business is entitled to occupy; and

3.2 whether or not each property is eligible for one of the existing rates relief schemes; and

3.3 the level of other public sector assistance received by the business (for State aid purposes - see below).

If a business has a single property in Scotland with a rateable value exceeding £15,000 (regardless of whether it is occupied or vacant) or several properties in Scotland (whether occupied or vacant) with a combined rateable value exceeding £15,000, then the business will not be eligible for the Small Business Bonus Scheme.

State aid

4. State aid is a European Commission (EC) term which refers to forms of public assistance given to undertakings on a discretionary basis, with the potential to distort competition and affect trade between Member States. State aid rules apply to aid measures in any form and are equally applicable to tax measures such as non-domestic rates relief. To ensure consistency and equality across the EU, guidance is provided in the Commission notice on the application of state aid rules to direct business taxation (98/C/384/03).
A copy of the guidance note for local authorities on Non-Domestic Rates Relief and State Aid (circulated to local authorities to coincide with State Aid Conference on 2 October 2007) is available for download by clickinghere:

5. Further guidance is available from the State Aid Unit website:

www.stateaidscotland.gov.uk

Application procedure for the Small Business Bonus Scheme

6. The Small Business Bonus Scheme is an application-based scheme. To determine the exact amount of relief to be awarded, local authorities should ensure they have complete, accurate and up-to-date information on each of the business's properties in Scotland. Businesses are required to apply to each local authority in which the business has a property in Scotland. For the purposes of assessing the percentage relief available, businesses will have to provide details of all properties in Scotland which they own, lease or which they are entitled to occupy, regardless of whether they are occupied or vacant.

7. Local authorities may, at their discretion, award relief to ratepayers without the need for a new application form provided they are satisfied that the information they already hold on each of the business's properties in Scotland is complete, accurate and up-to-date, for the purpose of determining the exact amount of relief to be awarded. Cases where a council takes a decision to award relief under such circumstances require to be documented and held on file. The documentation will have to be sufficiently robust to satisfy audit requirements. In case of doubt, it may be advisable to seek a new application form from the ratepayer.

Renewal of Relief

8. If a ratepayer receives Small Business Bonus relief in 2008-09, local authorities may, at their discretion, continue to award relief in 2009-10 provided they are satisfied that the ratepayer's circumstances have not changed. In case of doubt, a new application form and/or further information should be sought from the ratepayer.

9. Local authorities should carry out a periodic review (the exact timing is a matter for local authority discretion) to ensure that the information held about the business's properties in Scotland is complete, accurate and up-to-date.

Interaction with other Relief Schemes

Mandatory relief schemes and discretionary relief scheme for not-for-profit recreation clubs

10. Once calculated, the theoretical amount of Small Business Bonus relief should be reduced by the amount of any of the following reliefs - but it can't become negative:

10.1 As for Small Business Rates Relief:

• 80% mandatory relief for charities (including Community Amateur Sports Clubs);
• 50/100% mandatory empty property relief;
• Up to 50% discretionary relief for short-term empty property;
• 100% mandatory disabled persons relief;
• 50% mandatory rural rates relief; and
• £3,500 derating allowance for stud farms.

and

10.2 Additional compared with the Small Business Rate Relief Scheme:

• Up to 100% discretionary relief for not-for profit recreation clubs (which, in common with mandatory reliefs, is 100% Scottish Government funded). NB [2]

11. This means that all mandatory reliefs (and the particular discretionary reliefs listed above) continue to take precedence over relief under the Small Business Bonus Scheme. Reliefs will be apportioned so that the amount of Small Business Bonus is applied second. In effect, ratepayers will receive the higher of:

• the reliefs listed under 10.1 and 10.2 above that they are due to receive (subject to eligibility); and
• relief under the Small Business Bonus Scheme.

Unlike the current Small Business Rates Relief Scheme, however, no additional 5% relief is applied to the balance.

12. The following worked examples are provided for guidance purposes only:

"Top-Up" Discretionary Reliefs

13. "Top-up" discretionary reliefs will be applied after mandatory reliefs, including Small Business Bonus relief:

• up to 20% top-up relief for charities;

• up to 50% top-up relief for rural rates relief; and

• discretionary element of relief for stud farms.

14. This means that they will continue to operate as real "top-ups".

"Stand-Alone" Discretionary Reliefs

15. Some discretionary reliefs are available which are not "top-up" reliefs. These "stand-alone" reliefs include:

• Hardship Relief (no ceiling - subject to State aid limits); and

• Rural Rates Relief for subjects which provide a service of benefit to the community (for rateable values up to £14,000).

16. Both these schemes are funded 75% by the Scottish Government and 25% by the local authority. Such discretionary reliefs interact with the Small Business Bonus Scheme in exactly the same way as top-up reliefs, i.e. any discretionary relief that the council decides to grant will be applied after the Small Business Bonus and all mandatory and other reliefs listed in 10.1 and 10.2 above.

Contact: Scottish Government, Business Rates Enquiries, Area 3-J (North), Victoria Quay, Edinburgh EH6 6QQ

Email: Business.Rates.Enquiries@scotland.gsi.gov.uk

Website: www.scotland.gov.uk/businessrates

NB example is for guidance purposes only - local authorities are free to design their own forms

SMALL BUSINESS BONUS SCHEME - [sample] APPLICATION FORM

Subject address:

Reference No: Rateable Value:

The qualifying condition for the purposes of the scheme is defined as a business owning, leasing or otherwise entitled to occupy one or more business properties in Scotland with a total combined rateable value of £15,000 or less.

The level of SMALL BUSINESS BONUS SCHEME rate relief available depends on the combined rateable value of your business's eligible property (or properties), and is set out in the table below:

The exact level of relief awarded will depend on:

a) the combined rateable value of all properties in Scotland of which your business is in rateable occupation or (if vacant) which your business is entitled to occupy;

b) whether or not the property is eligible for one of the existing rate relief schemes; and

c) the level of other public sector assistance received by your business (see: State aid below).

STATE AID:

Applicants should note that the SMALL BUSINESS BONUS for which they are applying is granted as de minimis aid for State aid purposes. There is currently a ceiling of 200,000 Euros (around £150,000) of de minimis aid that can be granted over a three year period. If you consider that you have already received in excess of, or close to, this sum over the past three years, please attach details with this application form.

CHANGE IN CIRCUMSTANCES:

IT IS YOUR DUTY TO INFORM THE RELEVANT COUNCIL(S) OF ANY CHANGE IN CIRCUMSTANCES WHICH MAY AFFECT YOUR ELIGIBILITY FOR THE SCHEME .

[sample form continues overleaf]

ARE YOU LIABLE FOR RATES ON ANY OTHER PROPERTY IN SCOTLAND?

No [PLEASE TICK] Yes [PLEASE TICK]

If YES please detail below any other business premises you or your company/organisation are liable for in Scotland:

IF ANY OF THE ABOVE PROPERTIES ARE OUTSIDE THE [ insert relevant council ] AREA, PLEASE ENCLOSE A COPY OF YOUR MOST RECENT RATES DEMAND NOTICE.

PLEASE DETAIL, ON AN ATTACHED LIST, ANY OTHER ADDITIONAL PROPERTIES.

DECLARATION

I UNDERSTAND THAT:- The Council is under an obligation to manage public funds properly. Accordingly information that you provide the Council will be used to ensure all sums due to the Council are paid timeously. The information may also be used to prevent and detect fraud. It is possible that this information may be shared for the same purposes with public bodies, including Councils or other organisations which handle public funds.

I AGREE THAT:- You may make any enquiries necessary to check the information I have given. I understand that any relief awarded to me as a result of misleading statements deliberately given on this form will be recovered in full and that I may be liable to legal action.

I DECLARE THAT:- The information I have given on this form is true, complete and correct. I understand that the deliberate provision of false information in order to achieve financial gain is a criminal offence.

IMPORTANT Before posting this form to [ insert the council's Revenue Department details], please check the following:-

A PDF version of this document is available for download here

Have you included all requested documentation? (e.g. rateable values of any other business properties which you have anywhere in Scotland, details of other public sector assistance received)

Have you signed the declaration above?

NB [1] Thresholds for 2010-11 may be subject to change as a result of the Revaluation planned for 2010.

NB [2] Section 4(5)(c) of the Local Government (Financial Provisions etc.)(Scotland) Act 1962

A PDF version of this document is available for download here