As the third anniversary of the Lands Valuation Appeal Court (LVAC) hearing approaches, the case of the Tayside Assessor vs Old Faskally & Others remains unresolved and, with it, the entire problem of business rates for Small Hydro sites in Scotland.
Finishing Old Faskally
The 3-year wait for a hearing
In the spring of 2019, Lady Dorrian and her fellow judges issued relatively straightforward instructions, designed to bring the case to a conclusion.
The LVAC determined that the Tayside Committee had been incomplete in its process when reaching its previous verdict – that the rateable proportion of a hydro-electric scheme should be 25 per cent.
The Tayside Committee tasked the Assessor and the ratepayers (represented by Alba Energy) with providing costs for each of the six Old Faskally schemes along with a reiteration of their respective positions on what should and should not be rateable.
Alba Energy gathered as much cost data as was available, though some of the schemes had been built decades earlier, meaning that fully detailed accounts were no longer available. The accumulated data was more comprehensive than assessors had hitherto required for their valuations. Nevertheless, the Tayside Assessor – in this case, the appellant – declared it to be insufficient.
As an alternative, assessors and Alba Energy exchanged hydro construction cost data that they had assembled from comparable schemes. It took several months for the assessors to provide their own sample based data. By the beginning of 2021 it was clear that the two sets of data painted similar pictures, showing representative proportions of costs for the various components of a hydro. It then became an issue of providing the Tayside Committee with an agreed version of hydro costs. The hydro sector was also keen to share the Old Faskally data with the Committee, as instructed by the LVAC. The Assessor resisted doing so, on the basis that the Old Faskally cost data was unhelpful to his argument.
Having provided the Committee with the agreed cost samples, the next step was for the Committee to take this cost data and apply the appropriate categorisations to produce an overall rateable percentage. Alba Energy was confident that this cost data would support the original verdict of the Tayside Committee, namely a rateable share of approximately 25 per cent.
The Assessor, however, decided that they now needed to visit each of the Old Faskally schemes. This was early 2021, 8 years after the case was originally raised. At the same time, the Assessor indicated that they expected the Committee to re-open the entire case from first principles, though this was not required by the LVAC.
For the sake of moving things forward, Alba Energy arranged for the assessors to visit the four sites they had not previously seen, namely Keltneyburn, Monzie, Tombuie and Camserney. In each instance, the scheme owner or operator was in attendance to answer questions.
The assessors were shown that elements such as turbines and generators were clearly moveable and therefore non-rateable machinery. Grid connections were confirmed by all the hydro operators to be owned not by them but by SSE. It was explained to assessors that pipe trenches had been backfilled with the extracted material and could not therefore be categorised as a rateable structure.
All the evidence showed how assessors could now align their stance more closely to that of the previous two decisions of the Committee. However, communications in recent months have made it clear that the Tayside Assessor holds the view that the rateable share, rather than 25 per cent should be no less than 80 per cent, a figure which could result in rateable values approaching 40 per cent of gross turnover, which would produce, proportionately, the biggest rates bills in history.
January 2019: the Lands Valuation Appeal Court (LVAC) hears the Assessor’s second appeal against the decision of the Tayside Committee
April 2019: Lady Dorrian refers the case back to the Committee, with instructions to consider class 4 of the Plant & Machinery Order
September 2019: Alba Energy submits the costs of the six Old Faskally schemes.
October 2019: the Committee requests that the Assessor and Alba Energy agree a table of costs for the hydro schemes in question
The Assessor rejects Alba’s account of the Old Faskally costs but declines to provide his own, preferring to apply “model scheme” splits to overall costs, which are submitted in October 2020, a full year after the Committee’s request
The Committee does not accept this approach, on the basis that these are not the costs of “Old Faskally & Others”
February 2021: costs of representative hydro schemes agreed between Alba Energy and the Assessor, but the
Assessor then insists upon carrying out site visits to the four schemes not previously viewed
The visits are completed in April 2021
The Tayside Committee loses a member and takes legal advice to ensure that it remains quorate
August 2021: the Committee is deemed quorate
October 2021: the longstanding secretary of the Committee retires
Date for the third hearing at the Tayside Committee still to be set
While the assessor has been the prime cause of delay, the situation has been exacerbated by the Committee requiring to appoint not only new members but also a new secretary, after the recent retirement of Alastair Napier.
Alba Energy wishes to pay tribute to Mr Napier’s impressive endurance in his post and will continue to push for a hearing.
Appeals from the 2017 valuation roll are still outstanding and due to be heard at the Lands Tribunal, once the Old Faskally case has been resolved.
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