Government Grants Extended to Scottish Self-catering Businesses – But With Conditions

The Scottish Government’s support for businesses through grant funding during the Coronavirus outbreak had one notable exclusion – self-catering businesses.

This came as a surprise to everyone working in this business sector in Scotland, particularly because their counterparts in England and Wales are eligible to claim government support.

We understand that the Scottish Government’s primary concern is that non-commercial operations, such as second homeowners, could potentially claim grant funding.  This is because they may have managed to register for business rates on their “holiday home” before applying for the Small Business Bonus Scheme exemption in order to avoid paying any business rates.   It is entirely reasonable that the Scottish Government would not want to provide grants to anyone not running a proper self-catering business.

The Association of Scotland’s Self Caterers (ASSC) were in constant dialogue with the Scottish Government over the last week to ensure that genuine commercial self-caterers in Scotland could access the same grant support as their counterparts in the rest of the UK.  This resulted in a partial U-turn when, on Friday, the Cabinet Secretary for Finance, Kate Forbes MSP, set out the following for self-catering:

“…ratepayers for self-catering accommodation and caravans will be eligible for both the one-off £10,000 grant for small businesses and the one-off £25,000 grant for businesses in the retail, hospitality and leisure sectors announced on 18 March by the Cabinet Secretary for Economy, Fair Work and Culture. The grants will be available on the condition that:

• the property is each ratepayer’s primary source of earnings and that
• the property is let for 140 days or more in the financial year 2019/20
• applicants will be required to provide evidence of this, and grants will be restricted to one per ratepayer.

The closing date for applications is 10 July 2020.

The relaxation in the rules may help some individuals, but the vast majority of self-catering business owners will still be unable to access Government funding.  In most cases the primary source of income test could effectively block grant funding for individuals in receipt of a modest salary or pension.  Furthermore the 140-day test could be difficult to achieve for properties in rural areas.

The ASSC backed the Scottish Government in endorsing the closure of self-catering units during the Covid-19 crisis.  They believe that the above conditions applied to self-catering are unreasonable, inequitable and damaging to an already fragile sector.  This could mean that any commercially run operations are likely to run into financial difficulties over the coming months, without any Government support, unless the current conditions are relaxed or removed altogether.

If you are unduly affected by the current conditions imposed by the Scottish Government the ASSC have suggested that you contact your MSPs and ask them to lobby for a relaxation in the current eligibility criteria.

This of course is a moving target and there might be further announcements by the Scottish Government later this week.  We will keep you updated on this subject as matters progress.

Photo by Brian McGowan on Unsplash

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.