1. At its meetings on 19 September and 24 OctoberⁱMercedes Villalba MSP submitted apologies for this meeting. 2023, the Delegated Powers and Law Reform Committee considered the delegated powers contained in the Visitor Levy (Scotland) Bill ("the Bill") at Stage 1.

2. The Committee submits this report to the lead Committee for the Bill under Rule 9.6.2 of Standing Orders.

3. This Scottish Government Bill was introduced on 24 May 2023. The lead committee is the Local Government, Housing and Planning Committee.

4. The Bill comprises 75 sections arranged in 7 parts. According to paragraph 22 of the Policy Note, the Bill pursues a single overall objective, “to give a discretionary power to local authorities to introduce a levy on stays in overnight accommodation in all, or part of their area if they choose to do so”.

5. A brief outline of the Bill is contained in Annex A.

6. The Bill confers 17 powers to make subordinate legislation on the Scottish Ministers, and one power to make subordinate legislation on the Lord President of the Court of Session.

7. The Scottish Government has prepared a Delegated Powers Memorandum (“DPM”) which sets out the reasons for taking the delegated powers in the Bill and the procedure chosen.

8. At its meeting on 19 September, the Committee indicated that it was content with 14 of the delegated powers:

   • Section 5: Calculation of levy;

   • Section 9: Billing of overnight accommodation;

   • Section 13: Required content of a scheme;

   • Section 14: Publicity for introduction of scheme;

   • Section 16: Duty to keep separate account for scheme;

   • Section 18: Annual reporting on scheme;

   • Section 20: Scottish Ministers’ power to regulate process;

   • Section 31: Further provision about powers relating to information notices;

   • Section 64: Rate of interest;

   • Section 65: Power to change penalty provisions;

   • Section 66: Summary warrant;

   • Section 67: Reviews;

   • Section 68: Appeals;

   • Section 73: Ancillary Provision; and

   • Section 74: Commencement.

9. However, the Committee agreed to write to the Scottish Government to raise questions on the following delegated powers:

   • Section 4: Meaning of overnight accommodation;

   • Section 10: Exemptions and rebates; and

   • Section 36: Power to inspect business premises of third parties.

10. The Committee’s questions and the response received from the Scottish Government are set out at Annex B. The Committee's consideration of this, and the other delegated powers contained in the Bill, are set out in the next section of the report.

Section 4: Meaning of overnight accommodation

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

11. Section 4(2) defines the types of accommodation which may be subject to a levy. The list includes hotels, hostels, guest houses, bed and breakfast accommodation, self-catering accommodation, camping sites, caravan parks, and boat moorings or berthings, amongst other things.

12. Section 4(3) lists types of accommodation which may not be subject to a levy, namely, local authority or registered social landlord gypsy and traveller sites.

13. Section 4(4) gives Scottish Ministers the power to amend these lists of accommodation types by adding or removing a type of accommodation or varying the description of a type of accommodation.

Committee consideration

14. In its letter to the Scottish Government, the Committee queried why this power is not subject to a requirement to consult local authorities, providers of accommodation who may be affected by such a change, and other relevant stakeholders.

15. In its response, the Scottish Government explained that it has reflected on the point raised by the Committee and will seek to amend the provision to require the Scottish Ministers to consult local authorities and tourist organisations before making regulations under this provision.

Section 5: Calculation of levy

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

18. Section 5 sets out how the levy will be calculated. The amount chargeable is calculated by taking the accommodation portion of the purchase, deducting the amount of any commission payable to a travel booking service, and multiplying the resulting amount by the percentage rate of the levy (which is set by a local authority under section 6).

19. The “accommodation portion” is the amount attributable to the provision of the overnight accommodation. Subsections (3)(a) to (e) list things which are not attributable to the accommodation portion; these are additional facilities or services which may sometimes be provided to a person when staying at overnight accommodation, but which are not a central feature of the provision of the accommodation itself, for example, meals or drinks, entertainment, or parking.

20. Subsection (4) gives Scottish Ministers the power to add to, remove or vary the facilities or services which are treated as forming part of the “accommodation portion” of the chargeable transaction.

Committee consideration

21. The Scottish Government explained that this power will allow Scottish Ministers to adjust this aspect of the Bill in light of experience and that it would be disproportionate to require this to be done by primary legislation. The Committee was content with the explanation as to why the power has been taken and with the choice of procedure.

Section 9: Billing of overnight accommodation

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

23. Subsection (1) gives the Scottish Ministers the power to specify in regulations requirements for the billing of overnight accommodation. Regulations made under this provision may, in particular, require persons to issue an invoice to a visitor when entering into a chargeable transaction specifying separately: the cost of the overnight accommodation purchased; the percentage rate of the levy; the amount of the accommodation portion and any reduction required (for example, excluding commission to a third party); and the amount of levy chargeable in respect of the transaction.

Committee consideration

24. This power is technical and administrative in nature - it is concerned solely with how billing information is presented to the purchaser of overnight accommodation.

Section 10: Exemptions and rebates

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

26. Section 10 permits the Scottish Ministers to specify cases or circumstances in which a chargeable transaction is not subject to the levy, and to make arrangements for the issuing of exemption vouchers to categories of persons. For example, regulations may provide that the levy is not chargeable where a person purchases overnight accommodation for the purpose of accessing hospital treatment in the area in which the scheme operates.

Committee consideration

27. In its letter to the Scottish Government the Committee queried why this power is not subject to a requirement to consult with local authorities.

28. In its response, the Scottish Government explained that it has reflected on the point raised by the Committee and will seek to amend the provision to require the Scottish Ministers to consult local authorities and tourist organisations before making regulations under this provision.

Section 13: Required content of a scheme

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

31. Section 13 sets out the required content of a visitor levy scheme. Section 13(1) lists the aspects that must be specified in any visitor levy scheme. Subsection (3) gives Scottish Ministers the power to add to, remove or vary the mandatory elements of a visitor levy scheme listed in subsection (1) (other than the percentage rate of the levy set by a local authority).

Committee consideration

32. Paragraph 30 of the DPM states:

    Following the passing of the Bill, stakeholder groups such as local communities, businesses or local government, may identify additional content that ought to be specified in a visitor levy scheme, or existing requirements which are no longer relevant. It would not be appropriate to use primary legislation to amend the list in subsection (1), therefore the power to amend through secondary legislation has been chosen.

33. The power is limited to altering the content of a visitor levy scheme - it does not permit the Scottish Ministers to alter the percentage rate of the levy that is set by a local authority. The Committee accepts the reasons set out in the DPM for taking this power in principle and the choice of procedure applicable to its exercise.

Section 14: Publicity for introduction of scheme

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

35. Section 14(1)(b) requires a local authority which has decided to introduce a visitor levy scheme to publicise its decision and the proposed coming into force date of the scheme as soon as reasonably practicable. This includes publishing its decision to introduce a visitor levy, and the proposed date on which the levy will come into force.

36. Section 14(2) permits the Scottish Ministers to make further provision about the manner in which local authorities must publicise these matters.

Committee consideration

37. This power is administrative in nature – it stipulates what local authorities must publicise in relation to visitor levy schemes. As such, the Committee accepts the power in principle and is content that it will be subject to the negative procedure.

Section 16: Duty to keep separate account for scheme

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

39. Section 16 imposes a duty on a local authority operating a visitor levy scheme to keep a separate account for the scheme. Subsection (2) sets out that for each financial year, the authority must credit the account with the money received under the scheme and debit the account with the expenses of operating the scheme.

40. Subsection (3) permits the Scottish Ministers to make provision for or about the keeping of accounts by local authorities in connection with their functions.

Committee consideration

41. This power relates to an administrative matter, namely, the form that accounts must take and the requirements for publication. As such, the Committee is content with the taking of the power in principle and the that it will be subject to the negative procedure.

Section 18: Annual reporting on scheme

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

43. Section 18 provides that a local authority operating a visitor levy scheme must prepare a report on the scheme in respect of each reporting period, including information on the amount of money collected, how the net proceeds have been used, and the performance of the scheme by reference to its objectives. Subsection (2) requires a local authority to publish the report as soon as reasonably practicable and in a manner it considers appropriate.

44. Subsection (3) permits the Scottish Ministers to make provision about the content of reports under this section.

Committee consideration

45. This power is concerned with matters of administrative detail (i.e., the content of an annual report). As such, the Committee is content with the power in principle and that it will be subject to the negative procedure.

Section 20: Scottish Ministers’ power to regulate process

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

47. This section gives the Scottish Ministers power to make regulations about the process to be followed by local authorities when introducing, administering, reporting on, or reviewing a visitor levy scheme.

Committee consideration

48. Although cast in wide terms, this power is solely concerned with matters of process. It allows for the introduction of nationwide requirements on administration, reporting and reviewing visitor levy schemes. The Committee accepts the taking of this power in principle and the choice of procedure applicable to its exercise for the reasons set out in paragraphs 48 and 49 of the DPM:

    While similar accommodation taxes are common across Europe, there is no comparative tax in operation in any jurisdiction within the UK. This presents a number of unknowns over the most effective way for local authorities to administer a visitor levy scheme, which will likely be clarified through implementation and operation of the Act.

    The Bill has been framed to ensure that local authorities have sufficient discretion to design and tailor a visitor levy to suit their local needs. However, should concerns be raised during the implementation or operation of visitor levy schemes, this enabling power allows for the introduction of nationwide requirements on administration, reporting and reviewing. Taking a power to determine further provisions in regulations future-proofs the Bill, and provides the Scottish Ministers with the flexibility to respond if any new issues arise over time.

Section 31: Further provision about powers relating to information notices

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

50. This section provides the Scottish Ministers with a power to make regulations regarding the form and content of information notices and the manner and time period for complying with such notices.

Committee consideration

51. This power relates to the administrative matters of the form and content of information notices. Therefore the Committee is content with both the power in principle and the procedure applicable.

Section 36: Power to inspect business premises of third parties

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

53. Section 36 permits an authorised officer to enter and inspect business premises of an “involved third party” and to inspect “relevant documents” that are on the premises. Section 36(3) allows the Scottish Ministers to make regulations to specify (i) a person who is, or a category of persons who are, an “involved third party” and (ii) relevant documents.

Committee consideration

54. In its letter to the Scottish Government the Committee queried whether the choice of negative procedure provides an appropriate degree of parliamentary oversight, given that categorising a person as “involved third party” means that party’s business premises can be inspected.

55. In its response, the Scottish Government explained it has considered the Committee’s view and will seek to amend the Bill so that affirmative procedure applies to regulations made using the power at section 36(3).

Section 64: Rate of interest

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Negative

Provision

57. Section 64 permits the Scottish Ministers to make regulations specifying the rates of interest which are to apply to unpaid levy or unpaid penalties. Different rates can be specified for different penalties, and provision can be made for the alteration of rates of interest.

Committee consideration

58. The power to specify the rate of interest is an administrative matter. The Committee accepts this power in principle and is content that it is subject to the negative procedure.

Section 65: Power to change penalty provisions

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

60. This section gives the Scottish Ministers power to make further provision by regulations about penalties, including making amendments to the Bill or other legislation. Provision which can be made includes provision about the circumstances in which a penalty is payable and enforcement of penalties, but the power cannot be used to create criminal offences.

Committee consideration

61. This power is discussed at paragraphs 63 to 64 of the DPM:

    Reason for taking power

    Chapter 2 of the Bill contains provisions allowing a local authority to impose penalties on a person in relation to a visitor levy scheme. This power is needed to allow further provision to be made, where necessary, in relation to the issuing and enforcement of penalties. Changes to the penalty regime may be needed in the light of experience or changing circumstances to ensure that there is a robust and effective enforcement system in place. Scottish Ministers may also need to be able to amend the levels of penalty charge which may be applied: matters such as inflation or effectiveness as a deterrent may result in the need to vary the penalty charge.

    Choice of procedure

    Section 65(6) provides that regulations made in excise of this power are subject to the affirmative procedure. Given the power permits the Scottish Ministers to modify primary legislation, the Scottish Government considers it appropriate that the power be subject to affirmative parliamentary procedure.

62. As the power permits the amendments of primary legislation, the affirmative procedure applies. The Committee accepts the reasons set out in the DPM for taking this power in principle and the choice of procedure applicable to its exercise.

63. The Committee finds the power acceptable in principle and is content that it is subject to the affirmative procedure.

Section 66: Summary warrant

Power conferred on: Court of Session

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Laid – no procedure

Provision

64. Section 66 sets out the procedure for a local authority to take where a person fails to pay the local authority the amount of the levy payable, or a penalty imposed on the person. In these cases, the local authority may apply to the sheriff for a summary warrant. Subsection (5) requires the sheriff to grant a summary warrant in (or as nearly as may be in) the form prescribed by Act of Sederunt.

Committee consideration

65. It is standard practice for the form of a summary warrant to be set out in an Act of Sederunt. This is an aspect of court administration. Therefore the Committee is content with the power and the procedure applicable.

Section 67: Reviews

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

67. Section 67 requires the Scottish Ministers to make provision for and in connection with reviews by a local authority of: decisions made by the authority in connection with the operation of the scheme; enforcement action undertaken by the authority; and penalties imposed by the authority.

Committee consideration

68. The power is discussed at paragraphs 69 to 70 of the DPM:

    The policy intention for section 67 is that an accommodation provider should be able to challenge the decisions of a local authority in relation to the decisions it makes in connection with the operation of a visitor levy scheme. This includes in relation to enforcement action and the application of penalties.

    The level of detail required for a system of reviews under this section is considered more suitable for secondary, rather than primary, legislation. The decision to take a power through regulations for provision of reviews is in line with another discretionary local tax – the workplace parking levy – where the Scottish Ministers may make regulations about reviews of, and appeals against, decisions in relation to scheme.

69. It is standard practice to set out the detail of review procedures in regulations. Given the substantive nature of the power and its breadth, the affirmative procedure is considered appropriate. The Committee is content with this power in principle and the choice of procedure applicable to its exercise.

Section 68: Appeals

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative

Provision

71. Section 68 requires the Scottish Ministers to make provision for and in connection with appeals against to the First-tier Tribunal for Scotland against: decisions made by a relevant local authority in connection with the operation of a visitor levy scheme; enforcement action taken by a relevant local authority; and penalties imposed by a relevant local authority.

Committee consideration

72. This power is discussed at paragraph 73 of the DPM:

    The Scottish Ministers believe that the enforcement regime for a local visitor levy scheme is something which is best placed in subordinate legislation in order to enable it to be adaptive to the needs of the schemes and respond quickly to changes in behaviour or practice. Further, much of the detail of the enforcement regime is likely to be technical and procedural and therefore better suited to subordinate legislation.

    It is standard practice to set out the detail of appeal procedures in regulations. Given the substantive nature of the power and its breadth, the affirmative procedure may be considered appropriate. It is suggested that the Committee could be content with this power in principle and the choice of procedure applicable to its exercise.

73. It is standard practice to set out the detail of appeal procedures in regulations. Given the substantive nature of the power and its breadth, the affirmative procedure is considered appropriate.

Section 73: Ancillary Provision

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Affirmative if modifying primary legislation; otherwise negative

Provision

75. Section 73 permits the Scottish Ministers to make, by way of regulations, such incidental, supplementary, consequential, transitional, transitory or saving provision that they consider appropriate for the purposes of, in connection with or for giving full effect to the enacted Bill or anything done under it. These regulations may modify any enactment (including the Bill).

Committee consideration

76. This is a standard ancillary power.

Section 74: Commencement

Power conferred on: Scottish Ministers

Power exercisable by: Regulations made by Scottish statutory instrument

Parliamentary procedure: Laid only

Provision

78. Section 74 enables the Scottish Ministers, by regulations, to commence the Bill by bringing the substantive provisions of the Bill into force on such day as the Scottish Ministers appoint. Section 74(3) provides that such regulations may include transitional, transitory or saving provision.

Committee consideration

79. This is a standard commencement power.

81. The Bill comprises 75 sections arranged in seven parts.

82. Part 1 contains the power for local authorities to impose a levy and contains an overview of the Bill.

83. Part 2 contains the key concepts underpinning the levy. It sets out the types of accommodation in respect of which a levy may be imposed, how the levy is to be calculated, and who is liable to pay the levy. It allows the liable person to delegate the performance of certain functions to a third party. This Part also allows the Scottish Ministers to provide in regulations for the billing of overnight accommodation and exemptions from the levy.

84. Part 3 deals with how the tax is to be introduced and administered. It sets out the processes to be followed by a local authority when introducing a visitor levy scheme, including requirements as to consultation, scheme content, accounting and reporting. This Part also requires local authorities to use the net proceeds from a scheme for specific purposes.

85. Part 4 deals with returns and payments. It requires the liable person to make returns to the local authority (which must include an assessment of the amount of the levy payable) and pay the levy which is due. Returns and payments are to be made quarterly, or in respect of periods specified by the local authority. This Part also allows a local authority to delegate certain functions relating to the collection and enforcement of the levy.

86. Part 5 deals with enforcement of the levy and includes penalties for non-compliance. It gives authorised officers investigatory powers to require the provision of information or the production of documents and permitting the inspection of business premises. This Part also gives local authorities power to impose penalties on persons in connection with the levy. Penalties imposed under this Part include a penalty for failure to make a return and penalties for failure to pay the levy. Scottish Ministers are given powers to make regulations providing for the review of local authority decisions and appeals to the First-Tier Tribunal regarding decisions taken by a local authority in connection with the operation of a scheme, enforcement action and the imposition of penalties.

87. Part 6 provides local authorities with a power to set up a register of liable persons and allows local authorities to share information with certain persons (such as authorised officers who exercise enforcement powers in connection with the levy).

88. Part 7 contains provisions about the regulation making powers in the Bill, together with standard ancillary, commencement, and short title provisions.

Letter to the Scottish Government, 22 September 2023

At its meeting of 19 September, the Delegated Powers and Law Reform Committee considered the delegated powers contained in this Bill. It agreed to query three of the delegated powers in the Bill.

Section 4: Meaning of overnight accommodation

Section 4(4) permits Scottish Ministers to amend the types of accommodation listed in subsections (2) and (3). The Committee queries why this power is not subject to a requirement to consult local authorities, providers of accommodation who may be affected by such a change, and other relevant stakeholders.

Section 10: Exemptions and rebates

Section 10 gives Scottish Ministers the power to create national-level exemptions to the charging of a levy. The Committee queries why this power is not subject to a requirement to consult with local authorities.

Section 36: Power to inspect business premises of third parties

Section 36 permits an authorised officer to enter and inspect the business premises of “an involved third party” and to inspect “relevant documents”. Section 36(3) allows the Scottish Ministers to make regulations to specify (i) a person who is, or a category of persons who are, an “involved third party” and (ii) “relevant documents”. At paragraph 58 of its Delegated Powers Memorandum, the Scottish Government describes these as “procedural and technical matters”. However, given that categorisation as an “involved third party” means that party’s business premises can be inspected, the Committee queries whether the choice of negative procedure provides an appropriate degree of parliamentary oversight.

To allow the Committee sufficient time to provide a report on these powers to the lead committee scrutinising the Bill, it requests a response from the Scottish Government to the above questions by Thursday 5 October.

Response from Scottish Government, 29 September 2023

Thank you for your letter of 22 September concerning the delegated powers in the Visitor Levy (Scotland) Bill, following the Committee’s meeting on 19 September. I will take the points you have raised in turn.

Section 4 of the Bill lists the types of accommodation to which a levy can apply, and includes a power for Scottish Ministers to amend this list. Having reflected on the point raised by the Committee the Scottish Government will seek to amend the provision so that before making Regulations under this power Scottish Ministers would need to consult with local authorities and tourist organisations.

We would plan to take the same approach to the use of the power under section 10 of the Bill to create national-levy exemptions to the charging of a visitor levy. We will seek to amend the provision so that before making Regulations under this power Scottish Ministers would need to consult with local authorities and tourist organisations.

In relation to section 36 we have considered the Committee’s view, and will seek to amend the Bill so that affirmative procedure applies to Regulations made using the power at section 36(3).

I thank the Committee for their helpful comments, and trust this letter is useful in setting out the Government’s response.