Seòmar agus comataidhean

Good morning to you, convener, and to the committee.

The Land and Buildings Transaction Tax (Miscellaneous Amendments) (Scotland) Order 2024 provides for amendments to schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013 and introduces a new schedule 6A to the same act.

The amendments to schedule 2A relate to arrangements for the additional dwelling supplement. They address key stakeholder concerns about the existing legislation and ensure that the arrangements for the ADS work as intended.

New schedule 6A to the 2013 act provides extended relief from both residential LBTT and the ADS for local authorities purchasing property to meet local housing needs. It broadly aligns the treatment of local authorities with that of registered social landlords and will help to support our wider housing policies.

The Scottish Fiscal Commission considered the financial implications of the amendments in its December 2023 forecast, and the order was developed following a thorough consultation and review process, which included an initial call for evidence and views, followed by a consultation on draft legislation. The result of that process is a package of amendments that address key stakeholder concerns with the current legislation, ensuring that taxpayers are able to claim the reliefs and exemptions to which they are entitled and extending support where needed.

I welcome the contributions from a wide range of stakeholder groups in developing the content of the draft order, and I hope that the committee will support the motion to approve it this morning.

My understanding is that they would not be exempt, but I am happy to clarify that and write back to the committee. Our conversation has explored a wider range of issues around exemptions for public bodies. The question is whether, if local authorities are exempt, other public bodies should also be exempt.

We could start to go through every public body one by one, but I suggest that it would be helpful to the committee for us to take that away, to have further discussions, to engage with housing colleagues and the Minister for Housing, and to write back to the committee in order to provide a broader overview of the current landscape, provide clarity on the point that you raise and set out the work that we will be doing to develop policy in that area.

The previous conversation around the merits of a finance bill speaks to the fact that there will always be a need for care and maintenance. We have to take decisions based on the information that we have at the present time. Therefore, from that perspective, the answer is yes, but we recognise that, inevitably, other issues and concerns can emerge in the future and that we would respond to those, just as we have responded previously.

This particular tax has been the subject of quite a significant volume of legislation, both primary and secondary, and amendments since it was introduced. We will respond and will seek to do so in a way that is as open and transparent as possible through engagement. With regard to specific timelines around the issues that have been raised by the SPA, we will engage with the authority on that. As I said, I am more than happy to update the committee in due course on where those conversations lead.

My understanding is that HMRC’s discretion is really just to extend the timeline. I appreciate that it is 36 months in England, but one of the things that we are doing through the order is extending the period to 36 months.

The issue of whether Revenue Scotland should have such a discretionary power is one that we can explore, but it would represent a significant change from the way in which we operate at the moment, whereby Parliament legislates and Revenue Scotland provides the guidance. It would be a significant change for Revenue Scotland, recognising that HMRC operates under a different set-up. However, the broader point is one that we can consider. A lot more detailed consideration and exploration would be required.

I come back to the point about how we have sought to address the issues that have been raised, which have led to the order coming before the committee. Having identified, through consultation and engagement, a number of specific anomalies, we are seeking to address those directly by taking a targeted approach through the amendments for which the order provides.

I will make two points.

We have sought to address the circumstances that have given rise to the ask for an exceptional circumstances provision through some of the specific amendments that we make in the order. That should reduce the ask for an exceptional circumstances provision and is an important response to some of those specific circumstances.

We gave consideration to an exceptional circumstances discretionary power, but there is concern around administrative complexity and uncertainty, particularly for Revenue Scotland and taxpayers.

Through the order, we have sought to address some of the specific concerns that have been raised about the way in which ADS has operated previously. That is why we have not pursued an exceptional circumstances provision, but rather have sought a targeted approach to addressing some of the particular issues that have arisen previously.

The position on the engagement that the Scottish Government has had with the UK Government is broadly set out in the correspondence that I referred to. Clearly, the matters that are before us today—the issues that triggered the legislative consent process—are fairly narrow and technical and relate to the devolved aspects of procurement.

I recognise that there will be a range of views on the provisions of any trade agreement that the UK enters into. I recognise that the Parliament will have and take its opportunities to express its views on these matters. Ultimately, the decision on whether to enter into such agreements is a matter for the UK Government. We obviously appreciate and want to strengthen the opportunities that we are afforded for engagement with the UK Government, but the matter before us this morning is about the relatively narrow and technical aspects of implementation through the act and how they trigger legislative consent with regard to procurement.

These are, of course, minor changes that we are required to make, given the requirement to implement this particular agreement. On the detail and any specifics, I ask Alasdair Hamilton whether he wants to comment.

We will of course continue to seek to engage constructively with the UK Government on the implementation of the agreement, and we continue to engage with stakeholders. I am sure that the convener will appreciate that it is my colleague the cabinet secretary who leads on those particular matters.

We welcome the opportunities that the agreement will afford. The analysis that has been provided suggests that, overall, the impact on UK economic growth over the next couple of decades will be relatively minor, but any opportunities that are afforded for key Scottish industries, such as the Scotch whisky industry, are, of course, welcomed.

I am conscious that my colleagues the Cabinet Secretary for Rural Affairs, Land Reform and Islands and the Minister for Small Business, Innovation, Tourism and Trade have written to committees setting out in some detail the work that they have undertaken in engagement with the UK Government on the broader policy intent of the agreement.