Breaking New Ground? Developing a Scottish tax to replace the UK Aggregates Levy: consultation

Chapter 8: Tax Compliance

8.1 In order to ensure that the correct amounts of tax are paid at the right time it is important that a range of investigative and enforcement powers, with appropriate safeguards in place, are available.

8.2 Revenue Scotland has a range of investigative and enforcement powers in relation to the two existing devolved taxes, including powers to open enquiries, issue determinations, assessments and information notices, carry out inspections of business premises, and seek recovery of debt through the civil courts. These are in addition to the powers it has to impose civil penalties and interest

8.3 The Scottish Government proposes that those same investigatory and enforcement powers will also be available to Revenue Scotland in relation to a devolved tax on aggregates.

8.4 The following sections outline each of these powers in more detail and we would be grateful for your views on them.

Enquiries

8.5 The Scottish Government proposes that, subject to certain conditions and the time limits set out under Part 6 Chapter 4 of the RSTPA 2014, Revenue Scotland will have the power to open an enquiry into a tax return. The enquiry will be able to cover anything contained (or required to be contained) in the tax return relating to whether the taxpayer is liable to pay tax and/or the amount of tax which is liable to be paid.

8.6 Revenue Scotland will, if it considers it necessary, have the power to amend the self-assessment contained in the tax return either during or at the end of the enquiry (for example if not enough, or too much, tax has been paid).

8.7 Revenue Scotland will also have the power at any point during the enquiry to exercise any of its other investigative powers, such as issuing an information notice, carrying out an inspection etc.

Tax determinations, assessments and corrections

8.8 The Scottish Government proposes that, subject to certain time limits and conditions set out under Part 6 Chapter 5 of the RSTPA 2014, Revenue Scotland will have the power to issue a determination to a taxpayer where it has reason to believe that the taxpayer is liable to pay tax but has not made a tax return by the due date.

8.9 Consistent with current arrangements for LBTT and SLfT, the taxpayer will not be able to request a review or appeal in relation to the decision to issue them with the determination but they will be able to request a review or appeal in relation to the determination itself (see the Dispute Resolution section) or displace it by submitting a tax return within the time period allowed.

8.10 The Scottish Government also proposes that, subject to certain time limits and conditions set out under Part 6 Chapter 6 of the RSTPA 2014, Revenue Scotland will have the power to issue an assessment to a taxpayer

8.11 In both cases the determination or assessment would state, to the best of Revenue Scotland's information and belief, the amount of tax, penalties and interest which the taxpayer is liable to pay. This amount will be recoverable in the same manner as if it were unpaid tax.

8.12 If the determination or assessment contains an under-statement of the taxpayer's tax liability, and the taxpayer is aware of this, the taxpayer may be liable to a penalty for failing to take reasonable steps to notify Revenue Scotland.

8.13 The Scottish Government also proposes that, up to 12 months after receiving a tax return, Revenue Scotland will have the power under section 84 of the RSTPA 2014 to amend the return to correct an obvious error or omission.

Information notices

8.14 The Scottish Government proposes that Revenue Scotland will have the power, in certain situations and subject to specified rules set out in legislation under Part 7 Chapters 2-3 of the RSTPA 2014, to issue a legal notice (an "information notice") to a person requiring them to provide information and/or produce documents in relation to a Scottish replacement for the UK Aggregates Levy. The Scottish Government proposes that the same legislative provisions on information notices which currently apply to the existing devolved taxes will also apply to a Scottish replacement for the UK levy.

8.15 Additional safeguards will also be provided which prevent or restrict an information notice requiring the provision or production of certain types of sensitive information and documents, such as personal records, journalistic material, legally privileged information, and statutory audit information held by auditors.

8.16 Most people will comply with the requirements of an information notice. Where this is not the case, however, the person will be liable to a penalty. It will also be a criminal offence to conceal, destroy or otherwise dispose of (or arrange for the concealment, destruction or disposal of) any document after it has been required to be produced following an information notice which has been approved by the Tax Chamber of the First-tier Tribunal for Scotland.

Inspections

8.17 The Scottish Government proposes that Revenue Scotland will have the power, in certain situations and subject to specified rules set out in legislation under Part 7 Chapters 4-5 of the RSTPA 2014, to enter and carry out an inspection of the business premises of either a taxpayer or an "involved third party" in order to check a person's tax position. This does not include the power to enter or inspect any part of premises used solely as a dwelling.

8.18 The Scottish Government proposes that the same legislative provisions on inspections which currently apply to the existing devolved taxes will also apply to a devolved aggregates tax.

8.19 Most people will co-operate fully when an inspection is carried out. Where this is not the case, a person deliberately obstructing an officer in the course of carrying out an inspection, including in exercising any of the officer's powers, will be liable to a penalty if the inspection has been approved beforehand by the Tax Chamber of the First-tier Tribunal for Scotland.

Debt pursuit

8.20 The majority of taxpayers will pay the correct amount of money they owe in relation to a Scottish replacement to the UK levy. Some taxpayers may, however, be unable to pay the sum of money on time or will choose not to pay it upon demand.

8.21 Where associated companies have registered as group for the tax all members of the group will be jointly and individually liable for any debts relating to the tax.

8.22 In cases where a taxpayer has real difficulty paying any money that is due but is willing to find a way of paying, the Scottish Government proposes that Revenue Scotland will have the flexibility (as it does already) to work with the person to find a payment arrangement acceptable to both parties.

8.23 There will however be cases where, given the circumstances, it is not possible or appropriate to enter into such arrangements. In such cases, the Scottish Government proposes that Revenue Scotland will be able (as it does already) to undertake civil court proceedings to recover the debt by either:

• applying to the Sheriff Court for a summary warrant to be issued; or
• for particular types of cases, seeking recovery through proceedings before either the Sheriff Court or the Court of Session.

Interest

8.24 We propose that interest will be charged on any amount of unpaid tax or penalties in relation to a devolved aggregates tax. This is intended to compensate the tax authority (and therefore the public purse) or the taxpayer for the loss of the use of money, and is not to be viewed as a penalty or other sanction.

8.25 To provide for this, the Scottish Government proposes to use the provisions of Part 9 of the RSTPA 2014 and to modify the Revenue Scotland and Tax Powers Act (Interest on Unpaid Tax and Interest Rates in General) Regulations 2015.

Questions

B12 – Do you agree that, in relation to the devolved tax, the tax authority should have the investigatory and enforcement powers set out above?

If you answered no, please explain your answer.

B13 – Are there any other safeguards that might need to apply to these or any other powers you think may be needed?

B14 – Are there specific aspects of the industry that may require a different approach, and is there scope to make use of additional data and technical resources?