Scottish Aggregates Tax administration regulations: consultation

2. Scottish Aggregates Tax Administration Regulations

2.1 The following sections 2.A. - 2.H., set out the proposed SAT administration regulations. This will specify the administration requirements associated with the tax, to ensure that it can be successfully introduced on 1 April 2026.

A. Preliminary

Relevant Provisions: Part 1, regulations 1 - 2

A1. Introduction

2.2 This chapter provides clarification on the commencement of the regulations and defines expressions used in them. A copy of the draft legislative provisions is contained in Annex A of this paper.

A2. Citation and commencement

2.3 Regulation 1 stipulates that the regulations will be known as the Scottish Aggregates Tax (Administration) Regulations 2024.

2.4 The regulations will come into force on 1 April 2026, except for regulations 8 and 9 which will come into force on 1 December 2025. This will enable Revenue Scotland to administratively set up future taxpayers and non-exempt notifiers on the tax system prior to the tax going live.

A3. Interpretation

2.5 Regulation 2 defines the terms used, such as ‘accounting period’, which explains that taxpayers can choose to submit tax returns on a monthly rather than quarterly basis. Similarly, it provides a definition of an aggregates invoice and stipulates what it should contain.

2.6 Regulation 8 sets out those activities which are exempt from registration requirements. Regulation 9 sets out the activities which are exempt from registration but where a notification must still be made to Revenue Scotland.

2.7 The Scottish Government intends that these provisions will provide an early switch on of powers which enable taxpayers to register for the tax, but not of the time limits or penalty provisions for failing to register.

Questions

1. Do you agree that the provisions as drafted work as intended?

2. If not, what amendments would you propose to the draft legislation and on what basis?

3. Part 1, regulation 2 provides definitions of some terms such as aggregate, and accounting period. Are these definitions appropriate?

4. The Scottish Government has chosen to use the existing UKAL definition of aggregate for the SAT on the basis that it is compatible with the intended objectives for the tax, is well understood by aggregate producers, and is supported by existing UK Aggregates Levy (UKAL) taxpayers. Do you agree with using this definition for the Scottish Aggregates Tax?

B. Weight of aggregate

Relevant Provisions: Part 2, regulations 3 - 7

B1. Introduction

2.8 This chapter sets out the basic method for determining the weight of aggregate for the purposes of the tax and provides for specified and agreed methods to be used. The chapter additionally stipulates that where a quantity of aggregate is not weighed in accordance with this part, which has resulted in potential lost revenue, then the resultant inaccuracy in the tax return is deemed to be deliberate for the purposes of section 182 of RSTPA^[8] and the penalty is to be calculated in accordance with section 183 of RSTPA^[9].

B2. Standard Method

2.9 The standard method (regulation 4) is to determine the weight by the use of a weigh bridge which complies with applicable weights and measures legislation. The weight is to be measured at the time when the aggregate is first subjected to commercial exploitation.

B3. Specified Methods

2.10 Regulation 5 stipulates that in the absence of the standard method being followed and an approved or alternative method not being followed, Revenue Scotland will be able to impose the method to be used by the taxpayer.

B4. Agreed Methods

2.11 As per regulation 6, where the use of a weigh bridge is not practicable; the taxpayer may use another agreed method for weighing, if this has been agreed in writing with Revenue Scotland.

2.12 The Scottish Government intends that documentary evidence be retained by the taxpayer (including the workings and all relevant background documents) to explain and support any calculation of the weight of taxable or exempt aggregate.

B5. Penalties

2.13 Penalties may apply where the aggregate had not been weighed in accordance with standard/agreed methods, resulting in potential lost revenue; and/or where there have been deliberate inaccuracies regarding the weight of the aggregate.

2.14 It also includes a penalty provision at regulation 7 for failure to use a weighing method imposed by Revenue Scotland.

Questions

5. Do you agree that the provisions as drafted work as intended?

6. If not, what amendments would you propose to the draft legislation and on what basis?

7. Are the methods for determining the weight of aggregate for the tax appropriate?

8. Are the arrangements for penalties as set out in regulation 7 appropriate?

C. Registration

Relevant Provisions: Part 3, regulations 8 - 15

C1. Introduction

2.15 This chapter makes provision regarding exemption from the requirements of registering for SAT, and notification to Revenue Scotland.

C2. Exemption from registration

2.16 Regulation 8 sets out those activities which are exempt from registration requirements, as set out in section 6(2) to section 6(6) of the 2024 Act.

C3. Notification of commercial exploitation of exempt aggregate

2.17 Regulation 9 sets out that notification must still be made to Revenue Scotland for the commercial exploitation of certain exempt aggregate. These are currently the same exemptions as is provided for by UKAL. The provisions specify that the relevant activities are:

• Exempt aggregate under section 6(7), i.e. aggregate which consists wholly of the spoil from any process by which—

(a) coal (including bituminous coal, cannel coal and anthracite);

(b) lignite;

(c) slate;

(d) a substance listed in section 4(3);

has been separated from other rock after being extracted or won with that other rock.

• Exempt aggregate under section 6(8)(a), (b), and (c), i.e. aggregate which consists wholly or mainly of any one or more of the following, or is part of anything consisting wholly or mainly of the following—

(a) coal (including bituminous coal, cannel coal and anthracite);

(b) lignite;

(c) slate.

• Clay in section 6(8)(f) of the Act.

C4. Notification of taxable activities and cessation of taxable activities

2.18 This section provides for notifications by persons who carry out or intend to carry out taxable activities (regulation 10). This must be done in accordance with Revenue Scotland administrative arrangements, including notification within 30 days of the earliest of the following: the date on which the person formed the intention of carrying out taxable activities; or the date on which the person carried out taxable activities.

2.19 It also provides for notification of cessation of taxable activities (regulation 11) whereby a person who is required under regulation 9 or 10 to notify Revenue Scotland, has ceased to have the intention of carrying out taxable activities. This must be done in writing within 30 days of having ceased the taxable activities.

C5. Changes in particulars

2.20 Regulation 12 provides for changes in particulars. It sets out that where a person who has made a notification under section 18(3) of the 2024 Act or under regulation 9 discovers that any of the information contained is inaccurate must, within 30 days of the discovery, notify Revenue Scotland in writing of the inaccuracy and provide full details.

C6. Transfer of a going concern

2.21 This section makes special provision for transfers of a going concern (regulation 13). Revenue Scotland may, with effect from the date of the transfer of the business, cancel the registration of the transferor and register the transferee with the registration number previously allocated to the transferor.

C7. Representation of unincorporated body

2.22 Regulation 14 sets out where obligations under the 2024 Act are required by or on behalf of an unincorporated association, other than a partnership. Each individual partner is personally responsible for providing accurate and timely information as required by Revenue Scotland administrative arrangements in relation to this Part.

C8. Bankruptcy or incapacity of registrable persons

2.23 If a registrable person becomes bankrupt, incapacitated or dies, Revenue Scotland may, from the date when this occurred, treat any person carrying on any taxable business of the registrable person as though that person was a registered person (regulation 15).

2.24 The Scottish Government intends that persons who are exempt from the requirement to be registered but required to notify Revenue Scotland of exempt aggregate production keep any records required to support the exempt status. Such other records may be specified in a published notice by Revenue Scotland.

Questions

9. Do you agree that the provisions as drafted work as intended?

10. If not, what amendments would you propose to the draft legislation and on what basis?

11. Do you agree with the requirements for tax registration, and when notification must be made to Revenue Scotland?

12. Do you foresee any cross-border issues, behavioural or revenue impacts arising from the proposed approaches to tax registration?

D. Non-resident taxpayers

Relevant Provisions: Part 4, regulations 16 - 22

D1. Introduction

2.25 This chapter makes provision for non-resident taxpayers’ appointment of tax representatives, including duty to notify Revenue Scotland. Non-resident taxpayer has the definition as set out in section 26(2) of the 2024 Act: a person who is registered for the tax (or would be so required if not for an exemption) and is not resident in the UK.

2.26 Scottish Ministers may by regulations make provision for securing that every non-resident taxpayer, for the purposes of paying the tax, appoints a person resident in the United Kingdom to act as the taxpayer’s tax representative. Section 26(3) of the 2024 Act details that such regulations could include provision on:

• the requirement to notify Revenue Scotland where a person becomes a non-resident taxpayer;
• requirement for a non-resident taxpayer to appoint a tax representative;
• for the appointment of a tax representative to take effect only where the person is approved by Revenue Scotland, and where a request has been made to Revenue Scotland for such an appointment;
• authorising Revenue Scotland to give a direction for the replacement of a tax representative, or to require a person specified in the direction to be treated as the appointed tax representative;
• the circumstances in which a person ceases to be a tax representative and about the withdrawal by Revenue Scotland of its approval of a tax representative;
• enabling a tax representative to act on behalf of the person for whom they represent through an agent of the representative; and
• regulating the procedures to be followed for any of the above and imposing requirements as to the information to be provided to Revenue Scotland; as well as the timings for which things are done/take effect.

D2. Interpretation

2.27 In this part, “eligible to act as a tax representative” is to be construed with reference to section 26(1) of the 2024 Act which provides that a tax representative must be resident in the United Kingdom (regulation 16).

D3. Non-resident taxpayers: requirement and provision for tax representatives

2.28 Regulation 17 sets out that a non-resident taxpayer must notify Revenue Scotland in writing within 30 days of becoming a non-resident taxpayer.

D4. Replacement tax representative

2.29 A non-resident taxpayer may appoint a replacement tax representative, as detailed in regulation 18.

D5. Requirement to change tax representative

2.30 Regulation 19 stipulates that Revenue Scotland may, with effect from a date they specify, by way of written notice served on the non-resident taxpayer that they:

• withdraw their approval of their appointed tax representative,
• change their representative, and
• oblige that non-resident taxpayer to make an application in writing for Revenue Scotland’s approval for a person’s appointment as a replacement tax representative.

D6. Direction regarding appointment of tax representative

2.31 As per regulation 20, Revenue Scotland may give a direction requiring a specified person to be treated as the appointed and approved tax representative of a non-resident taxpayer from a specified date.

D7. Ceasing to be a tax representative

2.32 This provision indicates the circumstances whereby a person will cease to be the tax representative for a non-resident taxpayer (regulation 21).

D8. Tax representative: Duty to notify

2.33 Regulation 22 outlines the circumstances whereby a tax representative (or a person treated as such) must notify and provide full particulars to Revenue Scotland in writing.

Questions

13. Do you agree that the provisions as drafted work as intended?

14. If not, what amendments would you propose to the draft legislation and on what basis?

15. Do you agree with the provisions with regards to replacing a tax representative; and being directed to change a tax representative by Revenue Scotland?

E. Accounting period, returns, payment of tax

Relevant Provisions: Part 5, regulations 23 - 24

E1. Introduction

2.34 This chapter sets out the rules for accounting for SAT, by making returns in respect of accounting periods and payment of tax.

E2. Making of returns

2.35 Regulations 23 and 24 specify that a return must be made, and tax paid, no later than 30 days following the end of an accounting period.

2.36 A return under regulation 23 must also include a declaration by the taxpayer that the return is, to the best of the taxpayer’s knowledge, correct and complete.

2.37 However, where the taxpayer authorises an agent to complete the return, the agent must certify in the return that the taxpayer has declared that the information provided in the return is to the best of the taxpayer’s knowledge, correct and complete.

E3. Payment of tax

2.38 Where a return is made to Revenue Scotland under regulation 23, the tax due must be paid no later than 30 days following the end of the accounting period in which the tax liability arises (paragraph 1).

2.39 Paragraph 2 stipulates that where a return is amended, the tax payable as a result of the amendment must be paid by the latest of the following dates: the 30-day accounting period date (as referred to above); or the date on which the return is amended.

2.40 For the purposes of paragraphs (1) and (2), tax is treated as paid if arrangements satisfactory to Revenue Scotland are made for payment of the tax i.e. the tax is paid within the dates as outlined above.

Questions

16. Do you agree that the provisions as drafted work as intended?

17. If not, what amendments would you propose to the draft legislation and on what basis?

18. Do you agree that the arrangements are fair and proportionate?

F. Tax Credits: General

Relevant Provisions: Part 6, regulations 25 - 28

F1. Introduction

2.41 This chapter makes provisions for claims and payments in respect of credits of tax.

F2. Interpretation

2.42 Regulation 25 defines a “relevant amount” to be the amount of the credit as determined in accordance with Part 6 of these regulations. It defines “relevant tax” as the tax, if any, that was required to have been paid as a condition of the entitlement to credit.

F3. Scope

2.43 The Scottish Government intends that no credit arising under any provision of these Regulations may be claimed except in accordance with this Part (regulation 26).

F4. Claims in returns

2.44 Regulation 27 sets out rules for making credit claims in returns. This will require that the tax credit claim is made in the relevant accounting period and, if this is not undertaken by the taxpayer, they will have one year from the filing date under RSTPA section 83 to amend that return.

F5. Payments in respect of credit

2.45 As per regulation 28, Revenue Scotland will not be liable to make any payment under this regulation unless and until the person has made all the returns which the person was required to make.

Questions

19. Do you agree that the provisions as drafted work as intended?

20. If not, what amendments would you propose to the draft legislation and on what basis?

21. Do you agree with the rules for making credit claims in returns; and payments by Revenue Scotland in respect of credit?

22. Do you agree that it is sufficient to allow a taxpayer one year to amend a return in order to include a missed claim?

G. Credit: bad debts

Relevant Provisions: Part 7, regulations 29 - 36

G1. Introduction

2.46 This chapter provides for an entitlement to credit in respect of bad debts, and regulates the evidence required and records to be kept. It also provides for the attribution of payments to debts and the repayment of credit.

2.47 The definitions used in this chapter are provided for in Part 7 of Annex A.

G2. Scope

2.48 Regulation 30 specifies that bad debt credit can only be claimed in relation to commercial exploitation that occurred by aggregate leaving a site or by an agreement to supply. The provisions set out that other forms of commercial exploitation cannot generate a bad debt.

G3. Amount of credit

2.49 As per regulation 31, the credit arising under Part 7 of the regulations is an amount equal to such proportion of the tax charged on the taxable activity as the outstanding amount forms of the total consideration.

G4. Evidence required in support of claim

2.50 Regulation 32 sets out the evidence required in support of a bad debt credit claim, including any other evidence specified by Revenue Scotland in a published notice.

G5. Records required to be kept

2.51 The records required to be kept in support of a bad debt credit claim are outlined in regulation 33. The following information must be retained:

• in respect of each relevant transaction:
  • the amount of tax charged on that transaction;
  • the return in which that tax was accounted for and when it was paid;
  • the date and identifying number of the aggregates invoice issued in respect of the relevant transaction;
  • any consideration that has been received (whether before the claim was made or subsequently);
• the outstanding amount;
• the amount of the claim;
• the return in which the claim was made; and
• any other information that Revenue Scotland specifies in a published notice.

G6. Attribution of payments

2.52 The Scottish Government intends that payment is to be attributed to the taxable activity and the other matters in accordance with the rules set out in regulation 34.

G7. Repayment of credit

2.53 As stipulated in regulation 35, the claimant must repay to Revenue Scotland the amount of the claim to which the failure to comply relates.

G8. Writing off debts

2.54 Regulation 36 is to apply for the purpose of determining whether, and to what extent, the consideration is to be taken to have been written off as bad debt.

Questions

23. Do you agree that the provisions as drafted work as intended?

24. If not, what amendments would you propose to the draft legislation and on what basis?

25. Are there other circumstances in which commercial exploitation can have occurred and a debt could become bad?

26. Do you agree with the evidence required in support of a claim, including a requirement for any other evidence specified by Revenue Scotland in a published notice?

H. Tax credits: other

Relevant Provisions: Part 8, regulations 37 - 39

H1. Introduction

H2. Tax Credits in relevant circumstances

2.55 This chapter provides for an entitlement to credit where certain circumstances apply to the aggregate in question, such as moving the aggregate outwith the United Kingdom or being used in the industrial or agricultural processes listed in the Schedule (regulation 37).

2.56 The tax credit scenarios mirror that of UKAL, except for the addition of the cross-border tax credit. The relevant circumstances are that the aggregate in question:

• moved outwith Scotland to rUK, in the form of aggregate;
• is exported or removed from the UK from a place in Scotland without further processing;
• has an excepted process applied to it;
• is used in industrial or agricultural processes as specified in the Schedule;
• is disposed of by dumping;
• returned without further processing to its originating site/or a site which is not its originating site but is registered under the same name;
• is disposed of to landfill; or
• is gravel or sand and is used for beach restoration purposes at a site which is not its originating site.

H3. Evidence required in support of claim

2.57 This chapter also provides for the evidence required in support of a credit claim (regulation 38) and records to be kept (regulation 39).This includes all credit or debit notes or other documents received by the person which evidence an increase or decrease in the amount of any consideration for a relevant transaction, and copies of such documents that are issued by the person.

Questions

27. Do you agree that the provisions as drafted work as intended?

28. If not, what amendments would you propose to the draft legislation and on what basis?

29. Do you agree with the evidence required in support of a credit claim, and records to be kept?