One of the most significant problems with Business Rates over the past six years is that the valuations they are based upon have taken no account whatsoever of one of the longest and deepest recessions in Scotland’s modern history. Worse news is that history may be about to repeat itself, as next year’s revaluation may take little account of either Brexit or persistent low oil prices.

The reason for this is that even though the last revaluation took effect on 1 April 2010, the valuations themselves were based upon an earlier fixed point in time, namely 1 April 2008 which, coincidentally, marks the peak of the market just prior to the great recession on 2008-09, when our economy first began to shrink in June 2008.

Rating law means that no account can be taken of economic events that occur in the two year period before the commencement of the revaluation and therefore peak market, pre-recession values continue to apply to our rates bills to this day. Had the recession struck in 2011, ratepayers could have made a case for a reduction in their rates bills as a result of a material change of circumstances in the economy, but that option was not available where the recession hit during the period between 2008 and 2010.

That failure to recognise changing economic circumstances is reason enough to reform our system of Business Rates, and it is one of the points that the Scottish Chamber of Commerce network will be making to the independent review of Scotland’s Business Rates, which is currently seeking views from across the country on how the current system could be improved. Unfortunately the Review Group is not due to report until July 2017 – three months after the next revaluation takes effect. Once again, that revaluation will be based on valuations two years previously, that is 1 April 2015, and account cannot be taken of economic events in the intervening years.

That means that the valuations upon which businesses will be paying their rates bills as of next year cannot take account of the impact of the vote for the UK to leave the European Union, which took place on 23 June 2016, nor can it take account of the fact that global oil prices have remained stubbornly below $50 a barrel for much of that period.

Scottish Chambers of Commerce’s own Quarterly Economic Indicator recorded a sharp drop in performance among Scotland’s oil and gas businesses from the second quarter of 2015 onwards and this was reflected in the Scottish Government’s own official economic data, which shows that growth plunged from 0.7% in the first quarter of 2015 to just 0.1% in the second quarter, and it has failed to get above 0.3% in any quarter since then. Indeed, over the year since the first quarter of 2015, the Scottish economy grew by just 0.6%, in comparison to average UK growth over the same period of 2.0%.

This situation suggests that unless the Scottish Government acts urgently to allow our current economic situation to be reflected in the rates valuations, then once again Scottish businesses may end up paying rates bills that are based on valuations which are not only two years out of date but which, once again, take no account of seismic economic shocks.

So while the focus of the Scottish Government’s Business Rates activity may well be on how we can reform the tax in the longer term, there are significant questions over whether the revaluation due to take effect on 1 April 2017 will be fit for purpose and whether it could be as damaging to Scotland’s businesses as the last flawed revaluation in 2010.

Business Rates is a tax that has been devolved to the Scottish Government since the advent of devolution in 1999. At a time when devolution is bringing ever more control of new taxes north of the border, now is the time for the Scottish Government to act on a tax which it has had control of all along and ensure that Scotland’s businesses do not get punished once more for a coincidence of economic timing.