Land and Buildings Transaction Tax (Scotland) Bill: Stage 2
Item 3 is the second day of our stage 2 consideration of the Land and Buildings Transaction Tax (Scotland) Bill. I welcome to the meeting the Cabinet Secretary for Finance, Employment and Sustainable Growth, along with Neil Ferguson, John St Clair and Ian Young from the Scottish Government.
Members should note that the cabinet secretary’s officials cannot speak on the record at stage 2. As in the previous stage 2 session, all questions should be directed to the cabinet secretary. Members should have the marshalled list of amendments and the groupings.
Sections 44 to 46 agreed to.
Section 47—Residential property holding companies
Amendment 35, in the name of the cabinet secretary, is grouped with amendments 36 and 37.
This is a small group of three amendments to section 47, which gives Scottish ministers a power to capture the wrapping of residential properties in company structures to avoid LBTT. Tax avoidance is not welcome in Scotland. The amendments clarify the scope of any regulations that are made under section 47.
Amendment 35 will ensure that the regulations are able to capture the transfer of an interest in a residential property-holding company when the company holds property outside as well as within Scotland. That provision is needed because the definition of “chargeable interest” in section 4 captures property in Scotland only. Regulations that are made under section 47 will ensure that the chargeable consideration on which the LBTT payment is based will be in proportion only to the property that is held by the residential property-holding company in Scotland.
Amendment 36 clarifies that the regulations can specify different LBTT rates and bands for the transfer of an interest in a residential property-holding company.
Amendment 37 will enable the regulations to expand what counts as residential property for the purposes of section 47.
It is imperative that Scottish ministers are able to regulate to ensure that transfers of residential properties cannot avoid LBTT liabilities under section 47 by being held together with some non-residential property in a property-holding company, and amendment 37 will provide the flexibility to do that. For example, it will enable the regulations to capture any residential property that is held as part of a larger mixed-use property.
I move amendment 35.
Amendment 35 agreed to.
Amendments 36 and 37 moved—[John Swinney]—and agreed to.
Section 47, as amended, agreed to.
Section 48 agreed to.
Section 49—Partnerships
Amendment 38, in the name of the cabinet secretary, is grouped with amendments 64, 40, 45 to 50, 65 and 62.
I will speak to amendments 38, 40, 45, 50 and 62, and respond to amendments 64 and 65, which Gavin Brown has lodged.
The partnership provisions in the LBTT bill are complex, at least partly because of the complexity and range of the commercial transactions that the provisions bring within the scope of the tax. We took a conscious decision to follow closely the stamp duty land tax provisions in the area of partnerships, knowing that taxpayers and their agents have already been operating under parallel provisions in relation to SDLT for nearly a decade.
Despite the complexity, the provisions deliver policy objectives that I believe will bring about fair and reasonable tax outcomes. The first objective is that partnerships should get a partial relief from LBTT when they acquire a chargeable interest from a partner, to reflect the partner’s retained interest in the property that is transferred. The same principle should apply when a chargeable interest is taken out of a partnership.
Parts 4 and 5 of schedule 17 currently provide for that. The sum of the lower proportions calculation is used in both and has been used in practice since the SDLT partnership provisions were set out in the Finance Act 2004; it ensures that an appropriate amount of relief is obtained in any particular case.
11:00
The second policy objective is to ensure that partnerships and transactions involving them should not be a means of avoiding LBTT. Schedule 17 contains a number of different provisions to tackle avoidance. In particular, the schedule ensures that land transactions between partners and partnerships are taxed at the market value of the land in question rather than the actual price paid, if any. The schedule also provides for certain events following a land transaction to be taxed as if they were land transactions to prevent tax avoidance. For instance, paragraph 17 treats a partnership transfer as a chargeable land transaction if the transfer is pursuant to arrangements in place at the time of the transaction. Paragraph 18 makes further anti-avoidance provision.
Thirdly, paragraph 6 of schedule 17 contains provisions for property investment partnerships—PIPs—which are partnerships whose sole or main activity is investing or dealing in a chargeable interest in property. In essence, the provisions aim to prevent the wrapping of land and property in a partnership structure to avoid LBTT liability by ensuring that transactions in such wrapped property are liable to tax. Paragraph 31 of schedule 17 achieves that by providing that a transfer of an interest in a PIP is treated as a land transaction.
I reiterate what I said to the committee on 22 May on the issue of partnership provisions. We commissioned external advice to assist us in looking at options to simplify the provisions. The recommendations from that work shed some light on the issues, but further work is required to explore them and to decide what changes should be implemented. I do not believe that significant changes should be made without further engagement with stakeholders on these important matters and without particularly careful consideration of their effect. I accept that there are parts of schedule 17 that could be simplified or improved, but such alterations should not be rushed.
Amendment 38 therefore will enable schedule 17 to be amended by subordinate legislation in the future. That would allow the Scottish Government to revise the provisions on partnerships if that was felt necessary following further work and engagement with stakeholders. Amendment 62 provides that the subordinate legislation will be subject to the affirmative procedure, enabling close parliamentary scrutiny of any future proposals.
One way of helping taxpayers and their agents to navigate complex areas of tax legislation is to provide clear and comprehensive guidance. In my view, there is scope for addressing complexity in that way through revenue Scotland working closely with stakeholders. I therefore propose that officials working with those outside Government who have an interest in and are expert in partnership taxation matters should undertake further work on schedule 17. The aim of the further work will be to identify ways of making the law on the taxation of partnership transactions easier to understand and operate. I would also want that work to ensure that it remains difficult to avoid paying LBTT. Such work will look at addressing the complexity of the provisions by providing clear guidance; it will also consider whether the legislation itself needs revised.
Mr Brown’s amendments 64 and 65 represent an alternative approach to the issue, as they would take out all provisions on partnerships in their entirety. In my view, that would leave a vacuum in the LBTT framework. I stress again what I said to the committee on 22 May, which is that I have no desire to leave a gap in the LBTT bill. I appreciate that Mr Brown no doubt has it in mind that further work would be done to examine the options and then recreate an equivalent schedule 17, which would be added to the eventual act using subordinate legislation, and I accept that that would be an alternative way forward. However, I believe that the most effective approach is for officials to work with stakeholders to explore how best to address any shortcomings with the existing provisions, including through clear guidance. I do not want to anticipate the outcome of that further work, but it would be my intention to keep the committee abreast of progress and, if recommendations to amend schedule 17 emerge, to return to Parliament in due course with legislative proposals for approval.
The other amendments that I have lodged in relation to the partnership provisions can be classified as tidying-up amendments. Amendments 40 and 46 correct minor typographical errors. Amendment 40 inserts a missing “is” in paragraph 17(1)(a) of schedule 17. Amendment 46 changes “different” to “difference” in paragraph 31(5)(b) of schedule 17.
Amendment 45 ensures that a transfer of an interest in a property investment partnership that holds chargeable interests outwith Scotland as well as within Scotland is caught by the LBTT bill, although we note that by introducing the amendment we narrow the scope of the provisions in part 6 of schedule 17 compared with the equivalent provisions for SDLT. Where there is a transfer of an interest in a property investment partnership that holds land in Scotland and outside Scotland, the LBTT that is chargeable will be in proportion to the property or properties that are held by the partnership in Scotland only. That is provided for by paragraph 31.
Amendments 47, 48 and 49 are all amendments to paragraph 39 of schedule 17. Their main purpose is to clarify the application of charities relief in schedule 13 to transfers of partnership interests. Amendment 47 adds a further modification of paragraph 3 of schedule 13 to clarify what it means to hold property in a partnership for charitable purposes. The way that the provision read when the LBTT bill was introduced did not quite make sense and would have caused difficulties in practice, as it would allow charities relief to be claimed only in instances of the transferee holding the subject matter of a particular transaction, when the test ought to be that the chargeable interest itself is what is held for charitable purposes.
Amendment 48 allows charities relief to be claimed when profits are applied to the charitable purposes of the partners rather than just the partner to whom the interest has been transferred. Amendment 49 is a minor consequential amendment to paragraph 39(5) of schedule 17.
The purpose of amendment 50 is to clarify that a transfer of an interest in a partnership is constituted either when a partner acquires a partnership share or when their partnership share increases. The amendment does not constitute a policy change; it merely adds clarity with regard to the use of the legislation. The position is that a transfer of an interest in a partnership is constituted either when a partner acquires a partnership share or when either partnership share increases. In the latter case, an active step is not needed by a partner who is increasing their partnership share as the result of another partner retiring, for example.
I apologise for that marathon.
I move amendment 38.
Amendment 64 would compel the Scottish Government to make regulations in relation to how the law applies to partnerships, as opposed to allowing it to do so. Amendment 65 would leave out schedule 17, which deals with provisions for partnerships, in its entirety. I lodged the amendments because two weeks ago the committee had compelling evidence from the stakeholders—some of whom the cabinet secretary has referred to in previous evidence—that the partnership provisions, as they stand, simply do not work. They operate in practice, but as regards being workable for practitioners and those in partnerships, they are simply not up to the job. A number of interesting adjectives and nouns were used to describe how they were in practice—I will not repeat them. The provisions cut against the principles of the bill that the cabinet secretary laid out at the very beginning of the process—or, at least, against three of those principles: convenience, efficiency and certainty.
Consider some of the evidence that we have received. The Scottish Property Federation said:
“One of the problems with the SDLT legislation is that it has been built on over and over in 2003, 2004, 2007, 2010 and again in 2013, which does not make for good legislation.”
I agree with that. That is why I prefer to scrap schedule 17 and build it up from first principles, according to what stakeholders believe ought to happen, as opposed to hoping that we can build on it again and tinker with it.
We heard from the Institute of Chartered Accountants in Scotland, which said:
“In many cases, there is a complete lack of comprehension ... on the part of people who have worked in the area for many years, including those in HMRC. It does not work and, in many cases, is ignored because people do not know that there is a potential liability when transactions happen ... I strongly urge you to start again”.
We also heard that day from the Law Society of Scotland, which said:
“it is often ignored because people do not understand it ... SDLT partnership rules are based on income-sharing ratios. People find that difficult to understand because in real partnerships in the real world there are profit-sharing ratios and capital-sharing ratios, which are different. Automatically, therefore, you are off on the wrong foot”.—[Official Report, Finance Committee, 22 May 2013, c 2648-49.]
As I said at the beginning, I found those submissions compelling. I have a huge concern that we are simply cutting and pasting 19 pages out of the 97 in the bill straight from the provisions on SDLT, which is acknowledged by certain committee members and, indeed, the Institute for Fiscal Studies and the OBR as a tax that wins numerous prizes for being the worse-designed tax. My amendments would make the new regulations mandatory.
I take on board the cabinet secretary’s point that he would not want a vacuum at the end of this process, but there would be a vacuum only if, when the tax applies on the ground in April 2015, nothing had been put in place. I accept entirely that the matter is complex. However, given the quality of the work done so far by stakeholders and, indeed, the bill team, I cannot see why we are not capable, within the best part of two years, of putting in comprehensive, workable partnership provisions, built up from first principles, which apply the principles that the cabinet secretary described for the bill at the start of the process.
I will speak briefly to amendments 64 and 65, to which Gavin Brown has already spoken.
As the cabinet secretary has accepted, the reality is that there are arguments on both sides. It gives a degree of certainty to have something in black and white now; there is a lot less certainty if we have nothing down in black and white and just leave a gap. Although it is possibly the case that, as Gavin Brown feels, two years is plenty of time to come back with something better, I prefer to leave what is already there. If somebody comes up with something better over the next months or years, by all means let us lodge an amendment and change that.
I may be biased, because I am an accountant. When I speak to some of the lawyers, the attitude seems to be that if we had any amount of time and could really start from scratch in an empty room—and so on—we could build a perfect piece of legislation. That is not quite where we are now. It is great that this is the first tax bill that we have had in this Parliament. At the same time, however, we have time constraints; witnesses repeatedly tell us that they want certainty sooner rather than later. We would be going against the principles of predictability and certainty if we were to leave this provision out altogether and I feel that it is right that it remains.
To be honest, I find the decision a difficult one. There is a certain irony in the debate today, given that the cabinet secretary and, indeed, John Mason are lifting 17 pages straight out of Westminster legislation and Gavin Brown is saying, “It is rubbish, so let’s take more time to deal with it.”
The fact that the legislation is not coming into force for almost two years might tip the balance towards Gavin Brown’s argument, and I take the force of the cabinet secretary’s argument that normally we would not want to leave a significant gap in a piece of legislation. Therefore, I am tempted to cop out and abstain. On balance, however, I have been persuaded by Gavin Brown’s argument and shall vote for his amendment.
11:15
I have nothing to add to the comments that I have made, but I will address Mr Brown’s argument. On 22 May, I made the point to the committee that the Government has endeavoured to explore in detail and substance an alternative approach. With respect, we have not just cut and pasted 17 pages of UK legislation; we have commissioned external input to give us advice on whether there is a better way of going about this. The recommendations from that work have shed some light on the questions involved, but we need to undertake further detailed study before we can commit to any further legislation. That leads me inevitably to the conclusion that, despite our best endeavours to date, there is no compelling alternative proposition that is superior to the provisions in the bill. If we took them out we would leave a vacuum, and whatever the compulsion of Mr Brown’s amendment we might find ourselves back where we started when we came to fill that vacuum—which we would have to do, or we would leave the door wide open to potential evasion of tax. I do not think that the committee would want us to be in that situation.
I have looked again at the evidence that the committee has heard and I do not find it compelling. The witnesses suggested that the legislation operates but does not work, but I am afraid that I do not understand that proposition. If something operates, it must work. That seems a rather incoherent argument to make.
The provisions are complex because we are dealing with a very complex area of business activity. Therefore, the right thing to do is to create the legislation as we have suggested and to resist Gavin Brown’s amendments. We can then explore with stakeholders—as we have already done on the question of leases—how to formulate alternative propositions if we can. I stress that it is not a given that we will be able to do that. We have already done part of that exercise and have not found any better or stronger material than what is in the bill at the moment.
I encourage the committee to resist the temptation to leave a vacuum in the bill and to acknowledge that there is a good intention to deliver improved provisions if we can, although the evidence and the work that we have undertaken so far show that that is by no means guaranteed.
Amendment 38 agreed to.
Amendment 64 moved—[Gavin Brown].
The question is, that amendment 64 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Brown, Gavin (Lothian) (Con)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Against
Gibson, Kenneth (Cunninghame North) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
The result of the division is: For 2, Against 4, Abstentions 0.
Amendment 64 disagreed to.
Section 49, as amended, agreed to.
Schedule 17—Partnerships
Amendment 39, in the name of the cabinet secretary, is grouped with amendments 41 to 44, 54, 55, 53, 53A, 56 to 61 and 63.
The key amendment is amendment 53, which introduces a new schedule to deal with the tax treatment of leases under the land and buildings transaction tax. The new schedule sets out the detailed rules for taxing leases. Broadly speaking, the tax chargeable for a lease will be determined by calculating the tax that is due on the rent using the net present value of the rent payable over the length of a lease plus the tax that is due on any premium paid in addition to rent, which the schedule describes as a “consideration other than rent”.
The schedule sets out how to calculate the net present value for rent payable. Although the calculation appears to be quite complicated, it is widely accepted as the most appropriate way of calculating, for tax purposes, the value of a stream of rental payments over a number of years.
The calculation has three elements. The first is the temporal discount rate, which the bill sets initially at 3.5 per cent, which is the same rate as is used for stamp duty land tax. The discount rate could be varied by order, subject to parliamentary process. The effect of applying the rate is to calculate the value today—the present value—of rents that will be paid in the future. The second element of the calculation is the length of term of the lease. The third element is the amount of rent payable. Once the length of term of the lease and the rent payable have been determined, the statutory formula that is set out in paragraph 6 of the new schedule is used to calculate the net present value of rental payments. That is the amount on which tax due is based.
Scottish taxpayers will be familiar with the formula, as it is very similar to the formula that is used to calculate the net present value for leases that are taxed under stamp duty land tax. Taxpayers and their agents will have access to an online calculator to assist them with the calculation. Once the net present value of the rental payments has been calculated, the tax liability can be arrived at by applying the relevant rates and thresholds.
Leases often include a consideration other than rent, such as a premium payment that is made up front. That must also be taxed, because otherwise such arrangements could be used to minimise the rent payable and therefore the tax due. Tax due on the non-rental element of the consideration will be calculated in the same way as tax on chargeable consideration generally so, for example, section 25, on the amount of tax chargeable, will apply.
The new schedule also provides that, after submitting the initial tax return, a tenant must carry out a review of the tax due based on the rent actually paid in the period. The review period is every three years. The tenant must make a tax return to revenue Scotland at each review date and at the end of the lease. That will ensure that the tenant pays the correct amount of tax over the term of the lease by providing a mechanism for adjusting the tax due and paid if the rental or other payments under the lease vary over time. The review process will also recognise and account for other changes, such as extensions to the duration of a lease or the continuation of a lease beyond its end date by tacit relocation.
That approach, which has been discussed in detail with the Law Society of Scotland and other relevant stakeholders in the working group on non-residential leases, is considered to have advantages over the current system that applies to calculating tax due on leases under stamp duty land tax. For example, the revised system provides greater certainty about the timing of recalculations of tax payable and therefore about tax payments. The revised system also places fewer obligations on the tenant to submit a tax return during the period of the lease. It will no longer be necessary to submit a return every time that the rent changes. For example, the rental payable under some leases is based on turnover and the rent changes annually, depending on turnover figures. Under LBTT, additional returns will be limited to the three-yearly return and the return at the end of the lease. In short, any recalculation of the tax chargeable will generally occur only every three years.
I am grateful to the members of the working group on non-residential leases for their invaluable input into the preparation of the detailed rules for taxing leases that are set out in the new schedule. The group’s work demonstrates what can be done through joint working to achieve an outcome that is suitable to Scotland.
I am sure that it has not escaped the committee’s notice that the leases schedule runs to more than 15 pages. That demonstrates the complexities and technicalities that arise when seeking to apply taxation fairly and reasonably to the range of commercial situations that can arise perfectly legitimately under property law. That said, the system that I have outlined is, in the view of experts in the field, now better aligned with Scots law and practices and will therefore serve taxpayers in Scotland better than the current UK stamp duty land tax system.
The dialogue with the non-residential leases working group to refine the leases schedule continues, and a further meeting of the group has been arranged for 11 June. Following those discussions, it is possible that amendments will be required to the leases provisions at stage 3. At stage 3, I will also lodge technical amendments to earlier provisions of the bill that were considered at last week’s meeting.
All the other amendments in the group are consequential technical amendments to sections in the bill, and to schedules 17 and 19, that are necessitated by the leases schedule that amendment 53 will introduce.
I move amendment 39.
Before speaking to amendment 53A, I acknowledge the great work that the non-residential leases working group and the bill team have done. It seems from the evidence that the committee has received that the group’s proposals have had wide acceptance.
I have lodged one simple amendment, which concerns the rates that would apply to leases. I am advised that, under SDLT, there are currently two rates, which are 0 per cent and 1 per cent. My amendment 53A to the cabinet secretary’s amendment 53 would give the Scottish Government flexibility to mirror the situation south of the border or not, but being different would be a proactive decision.
I am not sure what the Scottish Government’s exact thinking is on the rates that it wants to apply or whether there would be two, three, four or more bands but, as amendment 53 stands, the Government would be locked into having a nil rate band and at least two other rates, which would mean that it could not possibly mirror what happens south of the border. The Government might not want to mirror that when the time comes to set the rates, but it might want to.
For that reason, I lodged amendment 53A to keep things entirely flexible. It would give the Government the option of following exactly what happens south of the border or doing whatever it likes when the time comes to make the decision.
I hesitate to speak, having made one mistake already this morning. I do not think that Gavin Brown is allowed to reply, which is perhaps a problem with the procedure in our Parliament, but my reading of his amendment 53A is that it would provide no flexibility, because it seems to say that there would have to be a nil rate tax band and one other tax band. I am not sure how that would give the flexibility that he mentions.
Convener, may I intervene on Malcolm Chisholm?
No, you cannot, but it is okay.
If the member reads amendment 53A in conjunction with what the cabinet secretary said, he will see that there would not be just one band. Amendment 53A would replace “two” with “one”, which means that there could be one, two or three bands, or as many as the Scottish Government likes.
Convener, am I allowed to come back in?
Of course.
That is not my reading of amendment 53A, and I do not really understand Gavin Brown’s point, but we do not need to delay things, because I am not going to vote for his amendment anyway.
Can I intervene, convener?
On you go.
If I read amendment 53A correctly—Gavin Brown can correct me if I am wrong—the words “at least” in amendment 53 will stay, so we would just be replacing the phrase “two other tax bands” with the phrase “one other tax band”. The new schedule would therefore say, “at least one other tax band,” which could be one or more.
Okay—I understand the point. I have made two mistakes this morning.
I will address the issues that Mr Brown raises in amendment 53A. Paragraph 3(2)(a) in the new schedule that will be inserted by amendment 53, which is lodged in my name, provides for a duty on the Scottish ministers to set
“a nil rate band and at least two other tax bands”.
That reflects the move to a progressive tax structure and is in keeping with the provisions in the bill for setting tax bands for other land transactions, such as purchases of property. Gavin Brown’s amendment 53A would change amendment 53 so that the Scottish ministers were under a duty to set a nil rate band and at least one other band.
The committee has just had an extensive debate about the retention of the crucial two words “at least”. Interestingly, that would allow the Scottish ministers to replicate the approach to SDLT if they chose to do so. However, as Mr Brown said, his amendment would not prevent the Scottish ministers from having a nil rate band and two or more other bands for non-residential leases. In the interests of progress and consensus, I am prepared to accept Mr Brown’s amendment 53A.
Amendment 39 agreed to.
Amendments 40 to 50 moved—[John Swinney]—and agreed to.
Amendment 65, in the name of Gavin Brown, was debated with amendment 38. Does Gavin Brown wish to move or not move amendment 65?
Without amendment 64, amendment 65 would not make sense, so I will not move it.
Amendment 65 not moved.
Schedule 17, as amended, agreed to.
Section 50 agreed to.
Schedule 18—Trusts
11:30
Amendment 51, in the name of the cabinet secretary, is grouped with amendment 52.
A bare trust arrangement is used when a trust holds assets for a minor or a person with a disability or when a trustee is appointed to hold property as nominee for someone else. At present, the beneficiary of a bare trust will be liable to pay LBTT.
However, bare trusts are sometimes set up to keep the beneficiary’s identity and interest confidential, which might present opportunities for tax avoidance. As a result, the bill’s policy memorandum included an intention to explore the possibility of lodging a stage 2 amendment to make the bare trustee liable for LBTT rather than the current position in which the beneficiary is liable.
Having considered the matter further, I have concluded that reversing the position for LBTT so that the liability fell on the bare trustee could create complications and unintended consequences. It is notable that for a number of taxes, including income tax and capital gains tax, the beneficiary is liable to pay the tax when the liability arises in respect of a bare trust. A better approach to tackling the problem is that proposed in amendment 51, which gives revenue Scotland a right of recovery against a bare trustee, in addition to its ability to recover tax from the beneficiary of a bare trust. For example, revenue Scotland could use that right of recovery when the beneficiary failed to make a tax return or when, following an inquiry, it is found that outstanding tax is due on a transaction.
Amendment 52 is consequential on amendment 51.
I move amendment 51.
Amendment 51 agreed to.
Amendment 52 moved—[John Swinney]—and agreed to.
Schedule 18, as amended, agreed to.
Section 51 agreed to.
After section 51
Amendment 30 moved—[John Swinney]—and agreed to.
Sections 52 to 54 agreed to.
Section 55—Application of this Act to leases
Amendment 54 moved—[John Swinney]—and agreed to.
Section 55, as amended, agreed to.
Amendment 55 moved—[John Swinney]—and agreed to.
After schedule 18
Amendment 53 moved—[John Swinney].
Amendment 53A moved—[Gavin Brown]—and agreed to.
Amendment 53, as amended, agreed to.
Section 56 agreed to.
Section 57—Connected persons
Amendments 31 and 56 moved—[John Swinney]—and agreed to.
Section 57, as amended, agreed to.
Sections 58 to 61 agreed to.
Section 62—Meaning of “effective date” of a transaction
Amendment 57 moved—[John Swinney]—and agreed to.
Section 62, as amended, agreed to.
Sections 63 to 65 agreed to.
Schedule 19—Index of defined expressions
Amendments 58 to 61 moved—[John Swinney]—and agreed to.
Schedule 19, as amended, agreed to.
Section 66 agreed to.
Section 67—Subordinate legislation
Amendment 62 moved—[John Swinney]—and agreed to.
Amendment 66, in the name of the cabinet secretary, is grouped with amendment 67.
The bill provides for tax rates and tax bands to be set by order. It also provides that the order for the first setting of tax rates and bands for land transactions other than non-residential leases will be subject to the affirmative procedure. As things stand, subsequent orders that might change tax rates or bands will be subject to the negative procedure.
Amendment 66 provides for the first order that sets tax rates and bands for non-residential leases to be subject to the affirmative procedure. Amendment 67 provides for subsequent orders that change tax rates or bands for all land transactions, including non-residential leases, to be subject to the provisional affirmative procedure. That will allow changes to the tax rates and bands by subsequent orders to be made with immediate effect, subject to parliamentary approval within 28 days.
Amendments 66 and 67 fulfil the commitment that I made in response to the Subordinate Legislation Committee’s report on the bill at stage 1. My letter to that committee stated:
“I intend to bring forward an amendment at stage 2 to provide that the power in section 24(1) will be subject to a form of provisional affirmative procedure after the first occasion that the bands and rates are set. This will allow the Scottish Government the necessary flexibility to respond swiftly to changes in the property market.”
I move amendment 66.
Amendment 66 agreed to.
Amendments 32, 63 and 67 moved—[John Swinney]—and agreed to.
Section 67, as amended, agreed to.
Sections 68 to 70 agreed to.
Long title agreed to.
That ends stage 2 consideration of the bill. Members should note that the bill will be reprinted as amended and will be available in print and on the web tomorrow morning. Parliament has not yet determined when stage 3 will take place, but members can now lodge stage 3 amendments at any time with the legislation team. Members will be informed of the deadline for amendments once it has been determined.
I thank the cabinet secretary and his team for their attendance. I am sure that you will all be glad that stage 2 is now complete—I certainly am. Thank you very much.
11:38
Meeting continued in private until 11:50.