Scots pubs lose out

AS a chartered surveyor dealing with pubs, hotels and restaurants in Scotland for the past 40 years, I have recently been comparing the Scottish Assessors’ valuation scheme, with the scheme for England and wales prepared by th evaluation Office Agency( VOA ).

The England and Wales scheme was published in October 2015, and it runs to 33 pages. The Scottish scheme, still in draft form, was approved for publication on 21 July 2016, and it runs to seven pages.

The VOA scheme incorporates ranges of percentages to be used against the liquor sales of various types of public houses and different ranges of percentages against food sales. In Scotland, food and liquor sales are to be taken together, generally at 8.5 per cent.

There is flexibility in the VOA scheme; but no flexibility in Scotland.

The VOA scheme ignores food sales below £30,000. In Scotland, such sales are being valued up to £2,550 of Net Annual Value (NAV).

The VOA scheme specifically states that the scheme is not an arithmetic exercise and it encourages valuers to “stand back and look”, to ensure a valuation figure appears reasonable compared to other assessments. There is no such suggestion in the Scottish scheme.

There is detailed advice to valuers in the VOA scheme in regard to potentially over-trading public houses, and how the matter should be treated. In the Scottish scheme, there is detailed advice on how to ignore potential over-trading in public houses.

In previous Scottish valuation schemes, there were allowances made against turnover in respect of entertainment costs (live music, Sky TV, etc). However, in the 2017 scheme these allowances have been reduced.

The result of this is that two public houses, each achieving turnovers of £300,000, would be valued the same, even if one pub has no entertainment costs, and the other spends £15,000 on entertainment, and is as a consequence much less profitable.

A group of Scottish private practice surveyors (including myself ) have had various meetings with the Scottish Assessors over the past two years to try to improve the 2017 valuation scheme, and to ensure that it included some flexibility. It appears that we have failed, with the result that Scottish publicans are now facing quite horrendous draft NAV increases - well over 100 per cent in a large number of cases.

I can only hope that some sense can prevail before the actual NAVS are issued in midmarch; but I am not holding my breath.

PETER HENRY St Vincent Street, Edinburgh