ASSC Sectoral Survey into Self-Catering Access to Business Support

Summary

ASSC undertook a survey, in order to inform greater discussion regarding the support required for self-catering operators in Scotland to ensure that no sector is left behind by government, as well as what changes are necessary to protect livelihoods in what has been a key component part of Scotland’s tourism offering for a generation.

Some of the key findings include:

• Self-caterers from across Scotland are experiencing severe difficulties in accessing business support grants from the Scottish Government that are being administered by local authorities.
• Just 15 respondents (or approximately 4% of the total) had had their application for a business support approved by a local authority by April 16^th.
• Self-caterers have reported confusion regarding the eligibility criteria from the Scottish Government, its interpretation by many local authorities, as well as the cumbersome and bureaucratic nature of the application process itself. Examples of this confusion include the inability to evidence 2019/20 incomes amongst many more.
• Respondents have highlighted that some local authorities are not processing applications from self-catering accommodation until further guidance has been provided from the Scottish Government.
• The overwhelming majority of self-caterer respondents have no knowledge of the appeal process – however, most have had no result from their application so have no grounds to appeal.
• Due to difficulties with accessing support, a large majority of respondents are deeply pessimistic about the future of their business over the next 6-12 months.

Updated data in 24 hours from 21^st April

601    responses in 23 hours

411     68% have still received no support

91      15% have received a £10k grant

1        0.17% have received a £25k grant

11      1.4% have had applications rejected

The remaining respondents are confused as to the eligibility criteria and have not applied.

With different local authorities behaving completely differently and asking for different hoops to be jumped through, why should geography dictate the amount of added stress that we are all going through at this time? See below for some case studies.

Case Studies

Case Study 1:

“Thank you for your e-mail regarding the information regarding what is now required after already filling in the application form more that 10 days ago on the 7/4/20. I have in fact been looking everyday for the grant money to go into my account, of which all the details were all given including my RBS business bank statement.

I am sure the department is aware that this is a total lifeline for me to stop my actually going under, I have put all my bills and loans on hold and I am now in arrears.

Sorry to be so blunt but I have only very limited funds to live on now £231.62 I cannot stress how important that this government grant aid is paid at the very soonest opportunity to my account.” Anon, Moray Speyside

Case Study 2:

“I have just had my application for the £10k grant summarily dismissed by Argyll & Bute Council. I am self-employed.  My FHL receipts for 2019/20 represent 22% of my overall receipts and as such represent a significant proportion, without which I am not financially viable.  A&BC quoted to me that my FHL receipts should constitute “a primary source of earnings (for example, one third or more)” and they have rigidly interpreted the 33% rule in rejecting my application.  Clearly 22% is very significant and does represent “a primary source” but they have simply and arbitrarily used the 33% figure without recourse to common sense or their own wording “a primary source” not the primary source.

“Similarly on the occupancy rate they have made an arbitrary ruling.  I reminded them that to qualify as a trading business under HMRC’s FHL tax rules, a property must be available for let for a minimum of 210 days and actually let for a minimum 105 days in any year.  Furthermore, as occupancy can be very variable from one year to the next, depending on economic conditions, weather and many other factors, HMRC allow averaging in meeting these criteria rather than confining it to one arbitrary year.  My business has been running for 13 years and I have met the HMRC criteria on availability and occupancy throughout this period.

“I believe that hotels and B&Bs have not had an occupancy criterion applied, and shops have no requirement to prove how much stock was sold during the year – indeed they don’t even have to prove they were open and available to trade, so this seems to be a deeply, negatively discriminatory criterion to apply to self-catering.

“In my case, for 2019/20 the availability was 365 days and the occupancy was 119 days, which I gave hard evidence for. I asked them that given HMRC’s pre-existing rules on FHL and the comparison with hotels, B&Bs and shops, I sincerely hoped they would deem this occupancy record sufficient for the grant to be approved.  However again, they stuck rigidly to this arbitrary figure of 140 days, even though there seems to be no logical precedent for that figure.

“This is deeply disappointing.  My MSP has been of no help whatsoever and government ministers I have written to have not even bothered to reply.

“Is there any prospect of these arbitrary rules, and their rigid interpretation, being relaxed so that self-catering can be treated on an equivalent basis to other small businesses?”  Holiday Cottages, Argyll & Bute

Case Study 3:

“We run a diversified rural business and farming represents the majority of our turnover and our more recent holiday cottage business has not yet reached this 1/3 threshold as apparently required by the Holyrood  Administration. Has there been any indication that this arbitrary 1/3 rule been removed?

“We have one unit in a different local authority from our main business here in Wigtownshire (Dumfries & Galloway Council). Have you heard of one Council rejecting claims for 75% payments for second units in different council areas?” Holiday Cottages, Dumfries & Galloway

Case Study 4:

A small business grant application is not being accepted unless additional evidence is provided on the following grounds:

“To enable me to process your application I require you to provide a copy of your self-assessment tax return summary page (we will accept your 2018/2019 tax return) and also confirmation of your weekly letting charges in respect of *** Cottage.

For self-catering premises I also require you to confirm that receipts represent a primary source of earnings (e.g. one third or more) – Yes/No

The property has been let out for 140 days or more in financial year 2019/2020 – Yes/No

Regarding claiming a grant in respect of a second property we are awaiting further guidance from the Scottish Government on this matter.  Any further guidance will be provided on the Council Website at www.dumgal.gov.uk”

Facts in defence of this application:

• The business is made up of two 3-bedroom properties
• For the two cottages turnover was £46,304.  Profit £16,819 year ending 2019.
• This is a separate business, with two full time employees and renting well over the 140 night limit
• In the date range April 2019-April 202, 272 nights can be evidenced in one property and 241 in the other
• These two properties brought 296 guests to the area during the period.
• The owners have been trading since they were married in 1999.  The parents were renting the same properties since 1982.
• The owners cannot evidence that the self-catering element of the ratepayers income represents one third or more of the overall income, but nonetheless represents a significant and NECESSARY part of the overall income
• It certainly illustrates an active income stream, showing it is not a ‘second home’ (the rationale for excluding self-catering from the scheme)

In England, this business would be eligible for two £10,000 grants, reflecting that they are two going concern businesses, and appreciating the loss of income associated with the Covid-19 outbreak. ASSC Director, Dumfries & Galloway