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I understand that you are compliant with the requirements that are placed on you by legislation but, as the director general of the Scottish exchequer, would it not make sense for you to at least take into account the National Audit Office’s estimates of future tax take?

Does that include the NAO’s estimate?

Thanks, Mr Simpson. I appreciate that pointer.

I thank all the members who have participated in this evidence session. I also thank the witnesses—the Auditor General, Rebecca Seidel and Lucy Nutley. Thank you very much for your co-operation and openness about the section 22 audit report that you have been required to produce. We will consider our next steps in relation to pursuing our interest in what, by all accounts—including appendix 1 of the report—looks very much like a public institution that has been in crisis.

I now suspend the meeting to allow a changeover of witnesses to take place.

Agenda item 3 is on the administration of Scottish income tax. We took evidence on 3 February on the reports that we had received from Audit Scotland and the National Audit Office. We want to explore further some of the implications of the reports, and we have a series of questions on them.

I welcome our witnesses. Alyson Stafford is director general of the Scottish exchequer, Fiona Thom is head of the income tax and reserved taxes unit at the Scottish Government, Jonathan Athow is director general for customer strategy and tax design at Her Majesty’s Revenue and Customs, and Jackie McGeehan is deputy director for income tax policy at HMRC. You are all very welcome.

I invite Alyson Stafford to make a short opening statement. We will then proceed to ask a series of questions.

Thank you very much, indeed, Auditor General. I also thank you for reminding us that active investigations are still taking place, which might make for some limitation in relation to the areas that we can probe into this morning. However, there is still an awful lot in the published report that we will seek further evidence on in the next hour or so.

The deputy convener of the committee, Sharon Dowey, will open up the questions.

We will need to consider what point is the right juncture to bring in the accountable officers, if that is the route that we decide to go down. I will bring in Willie Coffey at this point.

Thank you for setting out that introductory framework. I am sure that you will have read the evidence that the committee took on 3 February. We were particularly exercised by the fact that we are in years 4 and 5 of a distinctive Scottish income tax system but there appear to be what, in our eyes, look like significant gaps in the data that is available and in the evidence that we think is necessary to allow Parliament and the Government to make informed decisions and choices about income tax policy in Scotland.

We are particularly interested in the level of compliance activity that is Scotland specific, in whether there is sufficient—or any—data on the tax gap in Scotland, and in the extent to which the information can be interrogated and analysed, which we think is extremely important in fashioning the evidence upon which we can build a sustainable and effective tax system.

You mentioned service level agreements, which we will return to. We are very pleased that the Scottish exchequer and HMRC are here as parties to that agreement, because we will want to explore that in our questions.

I call the deputy convener, Sharon Dowey, to open the questioning.

I will pick up on that contemporaneous point before I come to my final question. Around the time of the UK spring budget statement, the Office for Budget Responsibility produced an assessment in which it suggested that there might be some buoyancy—a euphemism for an increase—in tax receipts, as a result of the rise in inflation. I presume that that assessment was based on wage and salary demands and rises perhaps going up at a higher rate than they have been for the past decade as a result of the fuelling impact of price inflation. My question is first to Jonathan Athow. Are you seeing any impacts from that rising inflation in your tax collection levels?

My next question is for Alyson Stafford and Fiona Thom. Figure 9 in the NAO report shows where there is most divergence in tax paid by earnings. Those who are on around £50,000 in Scotland pay higher income tax than those in other parts of the UK. In light of that and of what Jonathan Athow has just said, is the Scottish exchequer monitoring the situation? Do you have any sense that tax receipts might be going up, and do you have any plans for how they might be spent if they go up?

My final question is on a much more mundane and less exciting issue, but one that is very important to us: the service level agreement between the Scottish Government and HMRC. You will have seen that, in the evidence session on 3 February, we explored with Gareth Davies and Stephen Boyle how the agreement currently works and whether it could be improved. I suppose that my question is really about what consideration has been given to the existing terms of the service level agreement and whether it can be improved and cover things such as the tax gap in Scotland, for example.