A Consultation on Tax Management: Analysis of Responses

10. ANY OTHER COMMENTS

10.1 The consultation asked:

Question 38: Do you have any other comments you wish to make on the arrangements for tax management?

General comments

10.2 Two tax professionals re-iterated their support for the governing principles at the heart of the proposals (proportionate to ability to pay; certainty; convenience for taxpayer; and efficiency) and the key assumptions underpinning the tax management consultation. One emphasised assumptions which they felt were of key importance:

• tax management provisions should be common across all taxes;
• recognition that many taxpayers will appoint agents and so rules and systems much facilitate engagement with agents as well as taxpayers;
• be alert to what HMRC is doing and be prepared to learn from this, particularly in the interactions with the voluntary sector.

Key themes

10.3 Three key themes emerged from responses:

• Resourcing. The importance of Revenue Scotland having sufficient, appropriately trained staff was emphasised (Tax). Investment in appropriate IT systems with sufficient security and data handling protocols was also advocated (Tax).
  Another tax professional cautioned that in determining a way forward to a draft Tax Management Bill, consideration should be given to the scale of the tax and the time and resource constraints in the Scottish Government and Revenue Scotland. This respondent suggested a staged approach be adopted: firstly, this consultation to provide the necessary legislation to operate the taxes known to be devolved; second or later stages to follow when any future tax powers are devolved. A further consideration raised by this respondent to tackle resourcing, was for involving HMRC and its systems in Revenue Scotland's tax administrative role, particularly in the context of the limited range of devolved taxes. This arrangement was viewed as potentially useful to reduce duplication of effort and infrastructure costs.
• Commonality with HMRC. Concern was expressed that companies operating throughout the UK including Scotland may end up adhering to two sets of rules, placing them at a disadvantage. The example was given of the proposed five-year retention rate for records under the Scottish Tax Management regime, which is out of step with UK protocol. It was suggested that for UK firms it would prove difficult to separate out "Scottish records" from others (Tax). Another respondent agreed that the focus should be on common standards between the UK and Scottish models with deviation only where there is a good reason. They concluded:
  "Common time limits, penalties and other provisions will support better compliance and should minimise the additional costs to the taxpayers" (Deloitte LLP).
• Local democratic responsibility. Two local authority respondents argued that under the new tax management environment for Scotland, local democratic responsibility for taxation must be a key feature. One commented:
  "In the same way that taxation powers are being devolved to Scotland, in turn COSLA would argue that greater powers to control resources should be devolved to the local level. COSLA would therefore want to see the principles of localism and local democratic decision-making applied to any changes in the tax system going forward" (COSLA).

Additional considerations raised

10.4 A number of additional considerations were highlighted by tax professionals:

• Thought should be given to practical issues for taxpayers operating in Scotland but based outside, e.g. adviser attendance at meetings and hearings.
• With the adoption of the "Digital First" approach, emphasis should be placed on understanding and addressing the needs of those digitally excluded.
• Regard should be had for low income taxpayers. Consideration should be given to permitting Legal Aid in all cases, so that these taxpayers have access to the same legal remedies as others. Systems like "loser pays" and paying own costs could discriminate and deter.
• The degree of competition faced by Scottish companies is fierce, particularly against other European countries. The guiding principles of any tax management regime should include stability and certainty.
• Plans should be put in place to address issues which will be raised if Scotland votes in 2014 to become independent.

Specific comments

10.5 Two specific comments were documented:

• Consideration should be given to how some of the practical requests for information and tax-related returns from businesses occupying commercial premises and potentially liable at point of release for LBTT will relate with existing demands and requirements from nationally set but locally collected taxes (e.g. business rates) (Bus).
• The potential implications of the new Devolved Taxes for the UK's existing network of double tax treaties, and the possible necessity of intra-UK memoranda of understanding on double taxation between devolved UK administrations and HMRC, may need to be considered in due course (Tax).