Chamber and committees

I have no further comments.

Amendment 21 agreed to.

Amendment 22 moved—[Ivan McKee]—and agreed to.

Amendment 31 not moved.

Amendments 23 and 24 moved—[Ivan McKee]—and agreed to.

Section 56, as amended, agreed to.

Section 57—Role of designated officer

Amendment 25 moved—[Ivan McKee]—and agreed to.

Section 57, as amended, agreed to.

After section 57

The situation as is, without Liz Smith’s amendment 30, preserves the situation where the status quo applies; that is, where nothing is taken forward with regard to the situation until the appeal is resolved.

Amendment 22, which comes up in a later group, perhaps provides the reassurance that Liz Smith is seeking. Revenue Scotland gave commitments on that in its evidence. It is about putting into the legislation that the set-off is not applied until such time as any appeal process in relation to a dispute that might be in play in regard to a debit or money owed by a taxpayer to Revenue Scotland is resolved. It clarifies the point that the set-off would not take place until that happens. Amendment 22 therefore perhaps provides the reassurance that Liz Smith is seeking.

I urge members to support my amendments in the group. The amendments refine and add to the penalties relating to Scottish aggregates tax in part 1 of the bill. They integrate the penalties fully into the established devolved taxes penalty system and ensure consistency of approach with other fully devolved taxes.

Taxpayers are required by section 19 of the bill to notify Revenue Scotland when they cease to carry out any taxable activity so that they can be deregistered. Amendment 8 removes the penalty for failure to comply with that requirement. On reflection, I do not consider that a penalty is required, because there is no advantage to the taxpayer in remaining registered, and they will have to continue to fulfil other obligations until they are deregistered.

I turn to amendment 9. Section 211 of the Revenue Scotland and Tax Powers Act 2014 provides that the amount of certain penalties is to be reduced by the amount of any other penalty if it is applied and determined by reference to the same tax liability. Amendment 9 adds the penalty for failure to notify Revenue Scotland of exempt aggregate production to the penalties eligible for a reduction of that kind.

Section 20 of the bill requires taxpayers to notify Revenue Scotland of the production of specified types of exempt aggregate and to keep required records in support of that notification. Amendment 10 creates a penalty for failing to keep records as required. That penalty is necessary to ensure that record-keeping requirements are complied with.

Amendment 12 makes a consequential change to section 44 of the bill. Amendment 11 removes the penalty that was included in the bill at introduction for providing inaccurate documents in support of tax credit claims. Having taken into consideration the evidence that was provided during stage 1 and further engagement with Revenue Scotland, I am now satisfied that the penalty duplicates powers that are already available to Revenue Scotland and should be removed to avoid confusion.

Amendment 14 makes a minor change consequential to that removal. For specified penalties, Revenue Scotland or a tax tribunal can accept that there is a reasonable excuse for failing to comply with a statutory requirement. In such cases, there can be no liability if a penalty arises.

Amendments 15 and 16 apply the provision on reasonable excuse to the new penalties for failing to notify Revenue Scotland of exempt aggregate production and for failing to notify a change to group treatment.

Finally, amendment 17 relates to all the new penalties for the Scottish aggregates tax and specifies rules relating to the payment of the penalties and their assessment by Revenue Scotland. The amendment is intended to ensure that there are clear and consistent rules for all the new penalties.

I move amendment 8.

I thank John Mason for lodging amendments 32 to 35. As the committee will know, it is standard practice for the Scottish Government to review all legislation to ensure that it remains fit for purpose as part of our day-to-day policy development, and that is very much the case for tax legislation, too. Revenue Scotland is fully engaged in that process, offering its operational expertise in devolved tax administration.

The part 2 provisions in the bill relate to the Revenue Scotland and Tax Powers Act 2014 and take account of that on-going process. The Scottish Government also recently introduced a series of amendments to the LBTT additional dwelling supplement following a detailed review. In previous years, various Scottish statutory instruments have been introduced to Parliament that have amended the 2014 act as well as Scottish landfill tax and LBTT legislation in response to emerging issues, tribunal decisions and relevant developments in other parts of the United Kingdom.

In that context, the Scottish Government’s view is that a provision in the bill related to legislative review is unnecessary. Given the potential scope of amendment 32, a one-year time period is also considered unrealistic and would not result in meaningful review in practice. However, I wish to explore the issue further with the member and particularly with the committee to understand whether there are specific issues that you would like to be prioritised as part of the Scottish Government’s on-going commitment to review. The Scottish Government is also giving careful consideration to the possibility of making more formal commitments to legislative review as part of its proposed tax strategy. For those reasons, I ask John Mason not to press amendment 32 for the moment.

Amendments 33 to 35 would introduce amendments to the 2013 act and relate to specific issues that were raised by stakeholders during the stage 1 process. Mr Mason has comprehensively and thoroughly explained the details of the issues that are being considered, so I do not have to do so.

Amendment 33 would provide a retrospective effect for a 2018 change to LBTT group relief that was introduced by an SSI. I recognise that that reflects a ministerial commitment that was made by a previous Administration and that a change can be made only through primary legislation. On the basis of that prior commitment, and because it is purely an administrative matter with no implications for future tax revenues, I am content to support amendment 33.

Amendment 34 would provide for group relief to be available in LBTT in instances of non-partition demergers. I am sympathetic to the case for change but, given the complex nature of the subject—as we have witnessed—I wish to ensure that there is time to properly consider the wording of any amendment. That is to ensure that it does not introduce any unintended consequences to the legislation. As such, I invite John Mason not to move amendment 34 to allow for further consideration and engagement on the detail in advance of stage 3. I am keen to work with him on any potential amendment.

Amendment 35 is intended to provide absolute clarity on the timelines applying to LBTT sub-sale development relief. I am sympathetic to that, in particular as the intended effect appears to be in line with the policy intent for LBTT in this area and with the current Revenue Scotland guidance. I would of course wish to ensure that the wording of any amendment does not create any unintended consequences or other issues. I invite John Mason not to move amendment 35, to allow for further engagement in advance of any amendments being lodged at stage 3.

The purpose of amendment 18 is to make sure that situations that involve two different devolved taxes are in scope, which is a clarification of the intent of the legislation. It closes that loophole. We will discuss set-off in more detail in the next group, and I know that Liz Smith has lodged an amendment on that.

The important point is that there are safeguards for the taxpayer. The key concerns are on the ability to appeal and the review processes that provide that safeguard, which will maintain consistency with the legislation that is in place at the moment—including the important principle that tax remains due until such time as the review process has been completed.

I urge members to support amendment 18. The Revenue Scotland and Tax Powers Act 2014 provides that a taxpayer may make a claim for a repayment of tax, up to five years after the relevant tax return. Section 52 in this bill provides that a repayment of a claim can be refused in circumstances where a taxpayer has another amount of tax outstanding. That could relate to an undisputed amount of tax, an amount of tax due after a review or appeal or a failure to postpone payment in a review or appeal context. It adds to the existing list of circumstances set out in section 113 of the 2014 act.

Amendment 18 addresses a potential point of confusion that was raised during stage 1. It provides, as intended, that section 52 can be used when a taxpayer has a debit and a credit for the same devolved tax, as well as in situations that involve two different devolved taxes. I therefore urge members to support amendment 18.

Amendment 30, from Liz Smith, would have a much more fundamental impact on section 52. It would prevent Revenue Scotland from refusing a repayment claim in cases in which the taxpayer was disputing other outstanding debts through a review or appeal.

The Scottish Government’s position is that, in the case of a live appeal on another amount that is owed by the taxpayer, section 52, as amended by amendment 18, is consistent with broader provisions in the Revenue Scotland and Tax Powers Act 2014, and should not be amended in the way that is envisaged by amendment 30. Specifically, section 245 of the 2014 act provides for the important principle that

“Where there is a review or appeal ... any tax charged or penalty or interest imposed remains due and payable as if there had been no review or appeal.”

As amendment 30 would delay the timeframe during which section 52 could be used, it undermines that principle.

We will come to discuss set-off provisions in the next grouping but, for clarity, while there was a dispute, any repayment would not be automatically set off against tax that was due; the proposed arrangements would, however, preserve the status quo until the appeal was resolved. If the amount that is owed by the taxpayer is extinguished in an appeal, section 52 would cease to be relevant and the repayment claim would be considered against the other grounds in section 113 of the 2014 act. If the amount that is owed by the taxpayer is upheld on appeal, any set-off would be regulated by section 56. Revenue Scotland would provide guidance on the detail of that.

Overall, the Scottish Government’s view is that section 52, as amended by my amendment 18, would be more consistent with the existing legislation and would strike a better balance between the protection of the taxpayer and the protection of public revenues. For those reasons, I ask members not to support amendment 30.

I move amendment 18.

I have no further comment, convener.

Amendment 1 agreed to.

Amendments 2 to 4 moved—[Ivan McKee]—and agreed to.

Section 8, as amended, agreed to.

Sections 9 to 17 agreed to.

Section 18—Duty to register for tax

Amendment 5 moved—[Ivan McKee]—and agreed to.

Section 18, as amended, agreed to.

Sections 19 to 29 agreed to.

Section 30—Notification of cessation of eligibility for group treatment or of having place of business in UK

I have no further comments.

Amendment 8 agreed to.

Section 41, as amended, agreed to.

Section 42—Failure to notify production of exempt aggregate

Amendment 9 moved—[Ivan McKee]—and agreed to.

Section 42, as amended, agreed to.

After section 42

Amendment 10 moved—[Ivan McKee]—and agreed to.

Section 43—Inaccurate documents in tax credit claim

Amendment 11 moved—[Ivan McKee]—and agreed to.

Section 44—Failure to request approval of tax representative appointment

Amendment 12 moved—[Ivan McKee]—and agreed to.

Section 44, as amended, agreed to.

Section 45 agreed to.

After section 45

Amendment 13 moved—[Ivan McKee]—and agreed to.

Section 46 agreed to.

Section 47—General provisions for penalties relating to Scottish aggregates tax

Amendments 14 to 17 moved—[Ivan McKee]—and agreed to.

Section 47, as amended, agreed to.

Sections 48 to 51 agreed to.

Section 52—Refusal of repayment claim where other tax not paid

I thank Liz Smith for raising those important points and for welcoming amendments 19 and 20. Consultation is the crux of the issue, and the need for that is critically important. The lack of data has been recognised, including in the stage 1 debate and in committee. As more data becomes available, it will be important to use it to inform developments. It is important to have in place consultation provisions in the bill to allow that to happen effectively.

Amendment 19 agreed to.

Section 54, as amended, agreed to.

Section 55—Use of automation by Revenue Scotland

Amendment 20 moved—[Ivan McKee]—and agreed to.

Section 55, as amended, agreed to.

Section 56—Set-off by Revenue Scotland

I ask members to support my amendments in this group. The bill introduces the ability for Revenue Scotland to set off taxpayer credits against taxpayer debits. That administrative process is aimed at streamlining the payment of tax and reducing the number of unnecessary transactions that are required for both Revenue Scotland and taxpayers. That will support the efficient and effective administration of devolved taxes.

That power is particularly appropriate in a self-assessed tax system such as Scotland’s. The majority of the time, taxpayers will declare how much tax they owe to Revenue Scotland. There will, however, be occasions when either the taxpayer needs to amend the amount that they have declared or Revenue Scotland questions the declared or paid tax.

Revenue Scotland stated at committee that set-off would not be used where the amounts in issue are disputed. In such cases, taxpayers’ interests are safeguarded. I have introduced amendment 22 to clarify that set-off will not be used if the sum that is due by the taxpayer can be varied or set aside on review or appeal.

I hope that that offers reassurance to stakeholders and members who raised concerns about section 56 during stage 1.

As with section 52, I am conscious of the need to look at section 56 in the context of the Revenue Scotland and Tax Powers Act 2014. The act contains a number of different definitions and processes for the management of devolved taxes, and there is a danger of amendments having unintended consequences for other parts of that act. It is on that basis that I cannot support amendment 31 from Liz Smith.

Amendment 31 infers an equivalence between credits, which are sums that are payable by Revenue Scotland to a taxpayer, and debits, which are sums that are payable by a taxpayer to Revenue Scotland. Debits arise either by the taxpayer having self-assessed their liability or by a decision made by Revenue Scotland. Rights of review and appeal exist for the taxpayer in respect of the latter.

Credits may follow from reviews or appeals finding in favour of the taxpayer or by Revenue Scotland agreeing a repayment claim, or they may arise from an amendment of a tax return. However, existing provisions regulate credits in those situations and there is a risk that amendment 31 would create inadvertent change and legal uncertainty.

Making the requirement to pay credits subject to review or appeal could also operate to the detriment of a taxpayer if, for instance, the taxpayer was incurring interest charges on a debit.

If the goal is to protect the taxpayer, which is a laudable one, it is only the definition of “debit” in section 56 that needs to be adjusted. For those reasons I ask the committee not to support amendment 31 and instead support my amendment 22.

Lastly in this group, amendment 24 provides that the set-off provisions may not be used to set a post-insolvency credit against a pre-insolvency debit. That ensures that Revenue Scotland will not be unfairly advantaged in insolvency provisions and that the normal rules of insolvency will apply.

Amendments 21, 23 and 25 are minor and consequential to amendment 24.

I move amendment 21.