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If I was the chief executive of a Scottish bank but lived in London, commuted up from London and stayed in a hotel five days a week, even though I was spending more time in Scotland than in England, I would still be resident in England. Is that correct?

It is not necessarily linked to someone’s primary residence in that respect. Is that correct?

Good morning. In recent years, the main concern in Scotland has been the different tax thresholds, but we are now getting different rates potentially impacting behavioural patterns. I want to quickly put some scenarios to you to make sure that my thoughts are correct and perhaps to assist anybody who is watching. Am I correct in thinking that, if somebody lives in Berwick-upon-Tweed but works in Edinburgh—commuting into Scotland to do their job—they would not require an S tax code?

If someone was living in Berwick and working remotely for a Scottish company, it would be entirely applicable for them to have a UK tax code.

The overall Scottish tax base relies heavily on a very small number of upper-rate taxpayers. It would not take too many of those high-end payers to significantly distort the overall tax take. To what extent should that be on ministers’ radar? I am thinking both of behavioural change and of the impact of inward and outward migration—of fewer people coming here or of more higher-rate taxpayers leaving—if that differential becomes significant. Are ministers alert to the potential double risks that might have an impact on the upper-rate tax take in Scotland?

If you do not mind, I am going to crunch into reverse and go back to the issue of behavioural patterns, because there were some figures that I could not locate earlier, but I have found them now. A report that HMRC produced said that, for those in the upper-rate tax band—those who earn £150,000—a 1 per cent reduction in the percentage of income retained after tax leads to a reduction in income declared of between 0.52 and 0.77 per cent. The report made it quite clear that that was down not to non-compliance but to behavioural change. Does that not show that we already have empirical evidence that suggests that such tax increases will lead to behavioural change? Who should advise ministers about that—should it be HMRC, the Scottish Exchequer or the Scottish Fiscal Commission? Those figures seem pretty clear to me.

I put those scenarios to you because behavioural and working patterns have changed dramatically since Covid. People no longer have to live near their work, and remote working is far more common than it was. To what extent are you or either Government looking at the impact of remote working in relation to the operation of the tax system?

What are the emerging trends, and what is the emerging evidence telling you about behavioural patterns in Scotland? Is it too early to capture anything, or can we see that, for example, people are not taking promotions or doing the extra shift because the rate of tax is discouraging them?

I know that you have tax design in your job title; in terms of tax design, that is a pretty clear piece of the jigsaw that you would build into the tax system.

Thank you for the clarification.