The Scottish Government Consolidated Accounts for the year ended 31 March 2018

18. Contingent Assets/Liabilities disclosed under IAS 37

18a. Contingent Assets disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a Contingent Asset under IAS 37 Provisions, Contingent Liabilities and Contingent Assets is a possible asset, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control. Contingent Assets often cannot be reliably quantified; where values can be determined these have been provided.

Health and Sport

NHS Employer's Liability estimated at £1.6m (2016-17: £1.4m).

Rural Economy and Connectivity

Transport Scotland successfully defended an allegation of Glasgow Airport Rail Link (GARL) copyright infringement, and a subsequent appeal which was dismissed in May 2012. The process of recovering the expenses awarded by the Court of Session is now in the hands of Accountant in Bankruptcy.

Environment, Climate Change and Land Reform

The Ellis Building, part of the Marine Scotland estate in Aberdeen is subject to a legal case where the main contractor and architect are being pursued for breach of contract. There will be a further procedural hearing in the Commercial Court scheduled in October 2018. Note: Remedial works are currently being undertaken to the building costing circa £6m and these should be completed by the end of 2018 at which point a recovery of costs will be sought.

Communities, Social Security and Equalities

Grants repayable as a result of sales of Housing Association Properties to tenants or as a result of conditions of grant being breached. Grants become repayable when conditions of grant cease to be met. It is not possible to predict the level of activity in future years.

Repayments of grant from the Open Market Shared Equity Scheme which allows people on low incomes to buy a share in a property, the balance being owned by a housing association and funded by grant from the Scottish Government. If the property is sold or an increased share is purchased by the owner, the grant becomes repayable. It is not possible to estimate the level of future receipts.

Grants repayable from Edinburgh Council Rent Guarantee - Project Resonance. Grant becomes repayable if either (a) projects do not proceed as planned, where it is repayable immediately, or, (b) projects are sold on privately up to 10 years from now. Timing uncertain as to when events giving rise to the contingent asset are likely to occur.

18b. Contingent Liabilities Disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a Contingent Liability under IAS 37: Provisions,Contingent Liabilities and Contingent Assets is as follows:

• a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control; or
• a present obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or
• the amount of the obligation cannot be measured with sufficient reliability.

Contingent Liabilities often cannot be reliably quantified; where values can be determined these have been provided.

Health and Sport

Clinical and Medical compensation payments of £367m (2016-17: £304.4m).

NHS Employer's Liability estimated at £3.3m (2016-17: £3.2m).

NHS Third Party Liability, non-clinical compensation and other contingent liabilities estimated at £0.9m (2016-17: £0.9m)

Justice

Claims against former independent Conveyancing and Executry Practitioners in Scotland. This is a contingent liability relating to an agreement to meet any valid claims arising from the acts or omissions of past independent conveyancing and executry practitioners, as defined by the Law Reform (Miscellaneous Provisions) Scotland Act 1990.

Claim alleging that a Tribunal member received less favourable treatment contrary to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 because he did not receive a pension in relation to his part-time fee-paid appointment.

Potential prisoner compensation estimated at £0.6m (2016-17: £3.4m). (See also note 13).

Scottish Prison Service other costs estimated at £0.2m (2016-17: £2.9m).

Rural Economy and Connectivity

The Supreme Court found that an element of the Agricultural Holdings Act 2003 breached the European Convention of Human Rights - Art 1 P1. Remedial legislation was enacted to resolve this and a small group of tenant farmers have taken SG to Court of Session seeking compensation for breach of their rights arising from the Remedial legislation. The court has issued initial judgement but litigation is still live and more court activity is required to resolve.

Court case - Caledonian Bison Ltd were fully compensated for slaughter of their bison after bovine TB was confirmed. They claim a test used on the herd was unlawful and unreliable. As such there was no legal basis for the slaughter of the herd.

A fish farm in North Voe, Whalsay, Shetland (bay NE of Symbister harbour) was operating under a rolling Works License from Shetland Islands Council. It was inadvertently granted (permanent) planning permission in 2011 by Scottish Ministers (through an Order). If the new inter-island ferry terminal at North Voe goes ahead, the fish farm will have to move or reconfigure, requiring new planning permission, CAR licence and Marine Licence. The Scottish Government have admitted to being at fault and agreed to cover the operator's costs in obtaining these.

Following the 2015, 2016 and 2017 scheme years for CAP Pillar 1, both the level of late payment penalties from the EC to the UK member state and the split of penalties attributed to administrations are still to be formally concluded. EU CAP audits can result in future disallowances and a number of audits are in progress.

As part of Transport Scotland's normal course of business the Forestry Commission granted the right to use a forestry track as an emergency diversion route on the A83 Rest And Be Thankful on the understanding that Transport Scotland will have liability for any incidents that may occur whilst the track is being used for this purpose. The potential obligation is estimated at £5m (2016-17: £5m) but it is not considered likely that any liability will occur.

Communities, Social Security and Equalities

A liability of up to £47.2m (2016-17: £73.7m) following the Glasgow Stock Transfer could arise if HMRC were to successfully challenge the terms of the original VAT agreement that was entered into in 2004 by Glasgow Housing Association and Glasgow City Council.

The Mortgage Indemnity New Home Scheme (MI New Home) allows credit-worthy borrowers, locked out of the market by high deposit requirements, access to 90% to 95% LTV mortgages. The scheme is supported by a SG guarantee which sits behind cash indemnities set aside by participating housebuilders (for each house sold under the scheme). The guarantee valued at £7.2m (2016-17: £7.2m) can only be called upon once the indemnities are exhausted and lasts for 7 years.

National Housing Trust guarantees of £3.5m (2016-17: £3.2m) which the Scottish Government are committed to but which are not activated until construction has been completed.

Culture, Tourism and External Affairs

If the 2019 Solheim Cup were to be cancelled a payment of £5.6m (2016-17: £5.6m) would be due to the European Ladies Tour.

A shortfall in anticipated receipts from the 2019 European Indoor Athletics Championship would trigger a liability of £0.7m (2016-17: £0.7m).

If the 2018 European Championships were to be cancelled or service agreements were breached, a liability capped at £18.3m (2016-17: £18.3m) could arise.