Scottish Income Tax operation by HMRC: service level agreement

Service requirement

Overarching aims

23. The overarching aims in respect of HMRC’s administration of SIT are:

• HMRC will identify the Scottish taxpayer population and collect from it the correct rates of SIT to ensure the Scottish Government receives the correct amount of income tax revenue each year
• HMRC will account for the amount of SIT collected and report this in an Extract of HMRC’s Accounts to the Scottish Parliament each year
• HMRC will continue to administer income tax for Scottish taxpayers, and the employers of Scottish taxpayers and their payroll software providers in a manner equivalent to the service provided elsewhere in the UK
• HMRC will provide the Scottish Government with sufficient timely data to allow it to discharge its own duties in respect of SIT
• HMRC will invoice the Scottish Government for agreed net additional costs wholly and necessarily incurred as a result of the administration of SIT rates

Key requirements

24. The following key requirements have been identified for HMRC’s operation and administration of the SIT powers:

• identify and maintain an accurate and robust record of the SIT taxpayer population
• apply the appropriate Scottish rates to the non-savings, non-dividend income of Scottish taxpayers to allow HMRC to collect and account for the correct amount of income tax revenue due to the Scottish Government
• apply the same level of customer service, support and transparency to SIT taxpayers, and the employers of Scottish taxpayers, as applied to income taxpayers in the rest of the UK
• provide the Scottish Government with sufficient relevant and timely information and data to discharge its duties in respect of rate-setting and forecasting for SIT
• provide the Scottish Government with sufficient relevant and timely information and data to discharge its duties in respect of cash management due to any change between forecast and collected amounts of SIT
• provide the Scottish Government with sufficient relevant and timely information and data for assurance purposes and to budget effectively for any net additional costs to be recharged to the Scottish Government
• apply risk-based compliance activity to the collection of SIT in the same way as is applied to the collection of income tax from taxpayers in the rest of the UK
• provide the Scottish Government with sufficient relevant and timely information and data to assure itself of the effective use of Scottish Government money in the administration of SIT by the HMRC, including compliance and enforcement activity
• provide the Scottish Government with a full assessment of the delivery requirements, timescales, and costs of proposed SIT changes that lie within the legal framework set out at paragraphs 1 to 17 above.
• in line with this assessment, make the necessary changes to its systems and processes following confirmation of any changes to SIT by Scottish Government ministers. Subject to approval from the Additional Accounting Officer, this will be done prior to formal announcement by Scottish Government ministers where necessary and possible to ensure that the correct tax is collected from Scottish taxpayers.
• treat information provided by the Scottish Government about proposed SIT changes in line with the SIT confidentiality agreement, which is attached at Annex C

25. Performance measures in respect of these requirements are attached at Annex A: operation of Scottish Income Tax - HMRC Performance Measures.

Data sharing

26. The Fiscal Framework Agreement between the UK Government and the Scottish Government sets out that both governments have the agreed objective to provide each other with as full and open as possible access to technical, operational and policy information.

27. HMRC will provide the Scottish Government with information, including data, where it is required for Scottish Income Tax policy development. Where HMRC is unable to provide the information requested by the Scottish Government, HMRC will set out the reasons for this out in writing.

28. If any disputes arise regarding the sharing of information, these will be dealt with using the disputes resolution policy set out at paragraphs 40 to 42.