Seòmar agus comataidhean

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.

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 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.