Timeshare News

Some in the Scottish government are upset by the loss of local taxes from timeshare properties due to what they call a legal loophole. However, it might be several more years before local authorities in Scotland can change the battle over timeshares. The next reevaluation will be held in 2015. The Scottish government says that there will be a review of the operation in advance of the revaluation. Scotland estimates a loss under the current system of approximately 2 million pounds each year.

Scotland presently contains 18 timeshare developments. These developments allow people to purchase partial ownership of a particular unit for one or two weeks a year, during which they can use the property for a vacation. Therefore, these timeshare developments have been classified as a small business. This designation is for the purpose of calculating council rates. Due to the designation, the developments currently pay non-domestic rates instead of council tax. Usually, apartments qualify for substantial relief under the government with the business bonus arrangement. The effect is to save these timeshare developments a significant amount in taxes.

Aside from the loss of revenue, authorities suggest that it is unfair that most of these timeshares are operated by large businesses. The timeshares are often owned by the same company that puts the timeshare package together. Since the program was introduced in 2008, a number of the companies have saved significantly in taxes. For example, Gleneagles owns 52 Glenmore Village holiday homes. The company has managed to avoid paying approximately 750,000 pounds in taxes so far. Another timeshare development, located on the shores of Loch Lomond, includes 87 Cameron House lodges. The company has saved approximately 800,000 pounds. Hilton Hotels & Resorts has saved about 1.5 million pounds during the last four years with their 183 lodges at Craigendarroch, Coylumbridge and Dunkeld.

A letter dated February 2010 was recently leaked to the Sunday Herald. It was written by Scottish Finance Secretary John Swinney and addressed to the former MSP Jim Mather. In this letter, Swinney makes it clear that the government has been aware of the problem for some time. He explained further that the small business bonus is directed at obvious small businesses. He concluded that they would need to "strike of balance" that provides for the affordability of the bonus business scheme while applying rules that would remove specific types of small businesses.

Melfort Pier and Harbour owner John Christlieb, the subject of the letter from the Scottish Finance Secretary, explained that the issue is definitely a loophole for his business and other similar businesses. His apartments are charged according to rates purposes. This disqualifies them for relief. Christlieb said that the Melfort Club cannot be considered a small business under any circumstance. He said the same is true for Gleneagels and Cameron House.

The head of external affairs in Scotland for the Federation of Small Businesses, Colin Borland, stated that the small business bonus has helped many small firms during the depressed economy, as it was planned to do. He said the goal was to stop big businesses from claiming rates relief and that the program’s application to timeshares has become a contradiction of the original intentions.