Chamber and committees

I urge members to support this group of amendments in my name. They make changes in response to the stage 1 scrutiny of the bill by the Delegated Powers and Law Reform Committee.

Section 4 defines “excepted processes”, the products of which are not considered to be aggregates for the purposes of Scottish aggregates tax. Included as an exempt process is any process by which a relevant substance is extracted or otherwise separated from aggregate. The bill sets out a list of relevant substances, which are generally industrial minerals not used for aggregate purposes. Section 4(4) provides Scottish ministers with a regulation-making power to allow them to add or remove a substance from the list. Amendments 26 and 29 make the use of that power subject to the affirmative procedure, as recommended by the Delegated Powers and Law Reform Committee.

Section 12 provides Scottish ministers with the power to set the rate or rates of Scottish aggregates tax by regulations. The bill as introduced specifies that use of the power should be subject to the made affirmative procedure. Amendments 27 and 28 make the first use of the power subject to the ordinary affirmative procedure, as recommended by the Delegated Powers and Law Reform Committee, while subsequent regulations will remain subject to the made affirmative procedure. That is consistent with the approach taken for Scottish landfill tax.

I move amendment 26.

Amendment 26 agreed to.

Amendments 27 to 29 moved—[Ivan McKee]—and agreed to.

Section 58, as amended, agreed to.

Sections 59 to 62 agreed to.

Long title agreed to.

I have covered all the points, thank you.

Amendment 18 agreed to.

Amendment 30 not moved.

Section 52, as amended, agreed to.

Section 53 agreed to.

Section 54—Communications from Revenue Scotland to taxpayers

That is something that Revenue Scotland highlighted, as I understand it. If there is a chain of supply with a number of parties in it, Revenue Scotland wants the ability to identify where it is most likely to recover the tax from. It might look at the situation and decide whether to target that particular link in the chain as the most effective way of doing so, rather than being compelled to address every link in the chain, which might not be the most effective use of resource to recover the tax that is due.

I urge members to support my amendments in the group. The bill enables groups of companies to register collectively for Scottish aggregates tax and sets out how groups of companies and members of such groups are to be treated with regard to tax liabilities and administrative processes.

Section 30 of the bill establishes that, where bodies corporate are treated as members of a group for the purposes of Scottish aggregates tax and one of them subsequently becomes no longer eligible for group treatment, that body is under a duty to notify Revenue Scotland of that fact.

Amendment 6 clarifies that that notification must be made immediately upon eligibility ceasing. That provides certainty about the timing of notification and avoids any dispute should a related penalty be issued by Revenue Scotland.

Amendment 7 inserts a requirement that a person or body that becomes aware of any inaccuracy in an application or notification regarding group treatment must notify Revenue Scotland immediately of that.

Amendment 13 creates a corresponding penalty of £250 for failing to do so. That matches the existing provision and penalty for the United Kingdom aggregates levy and is intended to encourage inaccuracies to be brought to the attention of Revenue Scotland.

I move amendment 6

I have no further comment, convener.

Amendment 6 agreed to.

Section 30, as amended, agreed to.

After section 30

Amendment 7 moved—[Ivan McKee]—and agreed to.

Sections 31 to 40 agreed to.

Section 41—Failure to register for tax etc

I will move amendment 19, and I urge members to support my amendments in this group.

Consultation is one of the four pillars of the Scottish approach to tax policy, and is key to ensuring that legislation is fit for purpose. I know that the fact that the provisions in part 2 of the bill were not consulted on was discussed at length during stage 1, but it has always been our intention to undertake a full public consultation before introducing any secondary legislation. That consultation would be wide-ranging, focusing on both policy and operational considerations relevant to the enabling powers.

I have heard the calls from the Delegated Powers and Law Reform Committee and others for that commitment to be stated explicitly in the bill, which is why I was pleased to lodge amendments 19 and 20.

Amendment 19 will amend section 54 of the bill, which gives ministers a power to make regulations about communications from Revenue Scotland to taxpayers, including provision about the use of electronic communications. Having a regulation-making power here will allow for detailed consideration and engagement—as well as updates as technology develops—to provide clarity and certainty to taxpayers. It makes good sense to have a requirement for consultation in the bill.

Amendment 20 will amend section 55 of the bill, which gives ministers a power to make regulations relating to Revenue Scotland’s use of automation. That enabling power is intended to enable Revenue Scotland to automate those decisions that do not require an exercise of discretion or judgment. One such example of that would be Revenue Scotland’s function to assess and notify a penalty where a land and buildings transaction tax return is late.

I am conscious that, although the use of digital systems is growing in all parts of life, it is essential that those who cannot use such systems are not excluded. For that reason, the Scottish Government has always been clear that we will undertake thorough consultation prior to the introduction of the secondary legislation. However, as with amendment 19, I hope that by putting a requirement to do so in the bill, I am able to offer reassurance to MSPs and stakeholders who have expressed concerns.

I move amendment 19.

Good morning. I urge members to support my amendments in this group. As noted in the evidence that has been given to the committee and throughout the stage 1 debate, stakeholders have consistently raised concerns about unauthorised and untaxed aggregate. Section 8(5) of the bill provides that, where there is a supply chain arising from an agreement to supply taxable aggregate, every person in the chain is liable to pay the total amount of tax chargeable on the aggregate as a result of the agreement. That will not apply to those who have acquired the aggregate from a supplier who is registered for tax under section 17 of the bill.

The purpose of this section of the bill is to reduce tax avoidance by encouraging the purchasing of taxable aggregate from registered producers. The amendments in the group are intended to provide certainty about the application of that provision and reduce the potential for future disputes.

Amendments 1 to 3 confirm that the agreement referred to in section 8(5) is the original agreement to supply between producer and customer and that any subsequent agreements to supply the same aggregate form part of one chain of supply. That is intended to prevent disputes about what constitutes a chain of supply.

Amendment 4 is intended to confirm that the relevant time at which a supplier’s registration status should be considered is the point at which aggregate is acquired. That is to ensure that liability includes a scenario in which aggregate is acquired from someone who registers for the tax only at a later date.

Finally, section 18 of the bill requires those who carry out taxable activities to register for the Scottish aggregates tax. Amendment 5 changes section 18(4), which obliges Revenue Scotland to register such persons, whether or not they have notified Revenue Scotland, from a requirement on Revenue Scotland to register such persons to a discretionary power to do so. The amendment has been informed by further engagement with Revenue Scotland, and it is intended to provide the revenue authorities with operational flexibility to focus compliance activity where it is most effective in a chain of supply.

I move amendment 1.

Thank you, convener, and good morning, members of the committee. I am at the committee to talk about the regulations on protected trust deeds. The regulations aim to take forward stakeholder recommendations that will make improvements to the current protected trust deed process. They are accompanied by further provisions that will help to ensure that the statutory debt solution is fit for purpose, and they provide the necessary support and protection to people who need to access debt relief through that solution.

There has been wide consultation on the changes in the regulations. The provisions that have came from stakeholder recommendations were included in the public consultation document “Scotland’s statutory debt solutions and diligence: policy review response”, and were broadly supported. Additionally, members of the protected trust deeds committee, which is a group of prominent stakeholders who are involved in protected trust deeds, have been consulted throughout the process of developing the regulations and we have worked with them to address their concerns.

The regulations aim to help the most vulnerable people in our society by streamlining the discharge process and allowing an individual to be discharged early from their PTD if there are extenuating circumstances that mean that they can, through no fault of their own, no longer make contributions. That will allow people to be clear of problem debt at the most challenging times in their lives.

Reflecting the existing voluntary PTD protocol in legislation will ensure that all PTDs work to that best practice, which will end the current two-tier system. Ninety-one per cent of the current live PTD case load works under the voluntary system, which proves that it works. The regulations will build on that to ensure that all individuals who are involved in PTDs benefit from the same protection, irrespective of the trustee organisation that is involved.

That includes giving an individual who is in a PTD extra security by ensuring that the trustee will seek the Accountant in Bankruptcy’s agreement before refusing discharge and that, when a dividend is payable, creditors are paid at an earlier date. The new provision to allow the AIB to act as a trustee of last resort will provide security in the event of the failure of a volume provider of PTDs, if no other firm has the capacity to take on its cases. That will provide to all who are involved reassurance that the case will not be left without a trustee and that the administration will be able to continue under AIB until a new trustee is appointed.

The increase in the supervision fee will assist the AIB in its aim of continuing to generate sufficient funds to cover costs from conducting its statutory duties. That should combat the agency’s forecast shortfall over the next few years resulting from the reduction in bankruptcy application fees, which is a policy that was implemented to help the most financially vulnerable people in our society and was done in response to the pandemic.

In conclusion, I believe that the regulations provide a great opportunity to streamline and improve the protected trust deeds process and to ensure that it is fit for purpose. They will provide the necessary support and protection to those who need to access debt relief through that solution, as well as making it work well for others who are affected by the rules. I am happy to take questions.

The issue comes down to the two-tier system. The process works well in the majority of cases, but not everyone has signed up to the voluntary code.

Yes. First of all, it is important to recognise that the fees have not been increased since 2012, I believe. Inflation over that period has been 36 per cent. It is significant that we are looking at just more than half the inflation increase over that period being clawed back through the fee increase. That will flow through and be picked up on the creditor side. We reckon that there is about a 3 per cent reduction in the amount of money that creditors will receive through the process as a consequence of that change.

I think that it is a fair increase. As I said, it represents barely half of inflation over the period. It reflects increased costs and allows the process to continue to function and be administered effectively.