SHOOTING FOR THE STARS
The re-imposition of Sporting Rates is a politically motivated stunt that won’t raise promised tax revenues and will cost countless jobs in fragile rural communities
New government tax aimed at shooters is ill-founded
My old history teacher would repeat the mantra: ‘Those who do not remember the past are condemned to repeat it’. Wise words indeed, though lost on most politicians. In 1995 the Sporting Rates charged on land used for shooting and deer-stalking were abolished. This act of seeming generosity was recognition that the cost of administration and collection was such that it did not provide any significant net tax take for the public purse. As such, legitimate shooting businesses were being penalised without any benefit for the greater good, a glaring example of ‘tax inefficiency’.
The recent U-turn which saw the abandonment of the Scottish Government’s proposed wild fisheries reforms, which would have seen a vast increase in bureaucracy and cost for no actual gains in the numbers of fish in our rivers, followed the same sensible logic.
Roll forward two decades from the decision to remove rates on shooting and the Scottish Government has embarked on the labyrinthine
process of reinstating them. Appreciating this folly does not require a history PhD. The government’s own evidence suggests the relevant rural land use, and thus presumed tax base, has changed little in the intervening period; 70% of shooting providers operate on land where shooting has taken place for over 50 years. Anecdotally, shooting is highly marginal and every season we see more large estates abandoning commercial shooting, occasionally because of the imposition of vicarious liability but largely due to the demise of the corporate shoot day in this ‘age of austerity’ and anti-bribery legislation.
Despite the unchanging landscape and the fact that sporting rates were abolished because they failed to provide any net tax revenue, the Scottish Government now apparently believes reinstating sporting rates will produce enough tax to fund community buy-outs. I used to advise the Scottish Government on rates-based finance and modelled expected tax takes, my last such business plan being signed off by
Nicola Sturgeon herself. Trying to understand the financial wizardry behind these bold forecasts, I put in a Freedom of Information request asking for the financial models, supporting assumptions, correspondence and evidence provided by any expert consultations.
As the statutory 20-day limit for replying to my enquiry neared, my excitement mounted, only for the Scottish Government to enact a special extension provision used for requests requiring a particularly voluminous amount of data. Two days after the final reading of the bill passing Shooting Rates into law, a brief letter arrived confirming not so much as a back-ofa-fag-packet calculation had been attempted. A cynic might suggest the Scottish Government were somewhat bashful about the complete lack of intellectual rigour underpinning their assumptions and didn’t want this revealed while their bill was awaiting parliamentary scrutiny.
The strangest part of the reply was in respect of my request to see the written opinions of the experts they had consulted. They could not tell me which experts they had spoken to, and explained that: ‘we are unable to provide any guidance in respect of these discussions as this was provided orally and was not recorded.’ Surely the proceeds of this new taxation should not be frittered on community buy-outs while our own government is too impoverished to afford notepad and pens?
So what is being proposed? Most landowners have received a form from the District Assessor asking for all sorts of information; types of land used, profit and loss, game book entries, detailing estate roads and buildings – everything except landowners’ inside leg measurements. The assessors are quite open that the actual methodology is still to be defined. We can only hope the mass data dump being requested is to help address the wide variances in sporting land values with a necessarily nuanced approach. To give you a scale of this operation, over 6,000 letters were issued in Highland region alone.
The proposed scheme will be looking to tax the ‘sporting potential’ of land (i.e. the theoretical rental value regardless of whether shooting is currently conducted). Much of the early discussions with the shooting lobby focused on the assessor’s intention to differentiate between deer culling (which all estates undertake as part of a compulsory deer management plan) versus ‘sport’, where stalking is sold to individuals.
This poses some interesting conundrums, such as what to do about the high-profile Scandinavians buying up Scottish estates and conducting mass deer culls to encourage the rejuvenation of native woodland. Contractor fees for culling may mean the deer on their hillside represent a financial liability, while the neighbouring estate, which is likely to be stalking the same stags moving between the two, could attract wealthy overseas clients who pay grand sums to have their noble quarry piped off the hillside on a garron pony. Early discussions with the District Assessor have emphasised their willingness to use discretion, but the truth is that most deer shot in Scotland are both culled and sport, and most commercial estates operate under community-level deer management plans.
The issue of a fair and equitable methodology will rumble on, yet the Scottish Government is determined that rates will be due from April 2017. Should this arbitrary political line-in-thesand hold firm then many rates assessments will have to be backdated. Appeals against unfavourable assessments seem certain to clog the system up for years to come, and given the political pressure to produce a net tax take it will be interesting to see how long the assessors’ latitude to show ‘discretion’ will last.
One saving grace the District Assessor suggests is that small business relief will apply to the total rates paid by an occupier, which at the current rateable value threshold of £15,000 means the vast majority of shoots will be outside the scope of shooting rates altogether. Nevertheless, many larger estates, and some smaller ones, could get caught out where their sporting activities are in addition to holding properties already subject to Non Domestic Rates.
The shooting and stalking fraternity have complained loudly that sporting rates will sound the death knell of small shoots, family shoots and syndicates, but this certainly will not be the case. However, while shooting is a marginal activity on many larger estates, it does provide much needed employment for stalkers, beaters, restaurants and hotels in many remote rural areas (in stark contrast to those estates which have mothballed their shooting operations). Most rural land usage – such as farming, renewables and forestry – relies on being underwritten by the taxpayer through grants and/or generous tax breaks. It seems curious that our government chooses to penalise the one major source of rural employment that takes no subsidy.
Undoubtedly, sporting estates also provide much indirect tourism spend in remote areas. Meanwhile, shooting interests provide vital habitat management for over ten times the total area of all national and local nature reserves, providing the equivalent of 16,000 full-time conservation jobs, about eight times the amount RSPB spends on its reserves. As such it seems a deeply perverse measure to attack shooting, while failing to raise a penny for the ‘greater good’. Rory Kennedy is a partner and head of rural estates at Chiene + Tait LLP, Chartered Accountants. He also Chairs the Scottish Association for Country Sports.
‘A cynic might suggest the Scottish Government is bashful about the complete lack of intellectual rigour in their assumptions’