This group of amendments makes further provision in respect of counteraction taken under the general anti-avoidance rule. In particular, it provides that adjustments that revenue Scotland makes in order to counteract tax advantages under the GAAR are subject to the same administrative processes as are set out elsewhere in the bill, for example in relation to amending and correcting returns, the making of assessments and determinations by revenue Scotland and time limits.
Amendment 93 provides that the taxpayer must pay any outstanding tax, penalty or interest within a period of 30 days after a final notice of counteraction is issued under the general anti-avoidance rule.
I move amendment 84.
Amendment 84 agreed to.
Amendments 85 and 86 moved—[John Swinney]—and agreed to.
Section 61, as amended, agreed to.
Section 62 agreed to.
Section 63—Notice to taxpayer of proposed counteraction of tax advantage
Amendments 87 to 90 moved—[John Swinney]—and agreed to.
Section 63, as amended, agreed to.
Section 64—Final notice to taxpayer of counteraction of tax advantage
Amendments 91 and 92 moved—[John Swinney]—and agreed to.
Section 64, as amended, agreed to.
After section 64
Amendment 93 moved—[John Swinney]—and agreed to.
Section 65—Assumption of tax advantage
Amendments 94 and 95 moved—[John Swinney]—and agreed to.
Section 65, as amended, agreed to.
Section 66 agreed to.
Section 67—Overview
The amendments in this group make further important provisions about the rules and procedures regarding information notices. Among other things, they will require that a designated officer must always seek and obtain the approval of the tribunal before an information notice under section 119 or 122 can be given.
In keeping with the move to a single designated officer classification, the amendments remove all references to a designated investigation officer. The references to “a transaction” and “buyer” in section 121(2) of the bill may inadvertently create an assumption that the provision only applies to land and buildings transaction tax. Amendment 142 therefore makes it clearer that the section applies to a wider range of circumstances and, therefore, to both devolved taxes.
The current wording in section 121(3)(a) does not cater for partnerships that are not registered, such as common-law partnerships. Amendment 143 corrects that by allowing a third-party notice to state a name by which the partnership is known.
Other amendments in the group make further important provisions about inspections of business premises and the investigatory powers available to a designated officer. The amendments make it clear that a designated officer can carry out an inspection of business premises without advance notice only if there are reasonable grounds for believing that giving notice would seriously prejudice the assessment or collection of tax. When advance notice is given, it must be given in writing.
The amendments also give additional powers to an officer carrying out such an inspection, so that revenue Scotland can effectively discharge its investigatory functions in relation to Scottish landfill tax. Among other things, an officer will be able to bring other persons to the inspection. Such persons will be able to take and use any equipment or materials required for the purposes of the inspection, such as heavy machinery.
Finally, section 142(3)(b) of the bill currently places a reasonableness condition on the ability of a person to request a copy of a document that they produce to a revenue Scotland designated officer and which is subsequently removed by that officer. I do not think that such a condition is either necessary or fair. A person should always be entitled to request a copy of a document removed in such circumstances, and amendment 159 makes that clear.
I move amendment 132.
Amendment 132 agreed to.
Section 117, as amended, agreed to.
Section 118—Copying third party notice to taxpayer
Amendment 133 moved—[John Swinney]—and agreed to.
Section 118, as amended, agreed to.
Section 119—Power to obtain information and documents about persons whose identity is not known
Amendments 134 to 140 moved—[John Swinney]—and agreed to.
Section 119, as amended, agreed to.
Section 120—Third party notices and notices under section 119: groups of undertakings
Amendment 141 moved—[John Swinney]—and agreed to.
Section 120, as amended, agreed to.
Section 121—Third party notices and notices under section 119: partnerships
Amendments 142 to 144 moved—[John Swinney]—and agreed to.
Section 121, as amended, agreed to.
Section 122—Power to obtain information about persons whose identity can be ascertained
Amendments 145 and 146 moved—[John Swinney]—and agreed to.
Section 122, as amended, agreed to.
Section 123—Notices
Amendment 147 moved—[John Swinney]—and agreed to.
Section 123, as amended, agreed to.
Sections 124 to 126 agreed to.
Section 127—Information notices: general restrictions
Amendment 148 moved—[John Swinney]—and agreed to.
Section 127, as amended, agreed to.
Sections 128 to 134 agreed to.
Section 135—Carrying out inspections under section 133 or 134
Amendments 149 to 153 moved—[John Swinney]—and agreed to.
Section 135, as amended, agreed to.
After section 135
Amendment 154 moved—[John Swinney]—and agreed to.
Sections 136 and 137 agreed to.
Section 138—Approval of tribunal for premises inspections
Amendments 155 to 157 moved—[John Swinney]—and agreed to.
Section 138, as amended, agreed to.
Section 139 agreed to.
Section 140—Power to take samples
Amendment 158 moved—[John Swinney]—and agreed to.
Section 140, as amended, agreed to.
Section 141 agreed to.
Section 142—Power to copy and remove documents
Amendment 159 moved—[John Swinney]—and agreed to.
Section 142, as amended, agreed to.
Section 143 agreed to.
Section 144—Review or appeal against information notices
Amendments 160 and 161 moved—[John Swinney]—and agreed to.
Section 144, as amended, agreed to.
After section 144
The bill as introduced established three separate categories of officer—an authorised officer, a designated officer and a designated investigation officer, who were each able to exercise some of the powers of revenue Scotland. During stage 1, that was criticised by a number of stakeholders as being unnecessarily complicated. I accept that criticism. Therefore, the purpose of the group of amendments is to replace the three different types of revenue Scotland officer with a single category of designated officer for the purpose of exercising relevant powers. That will enable revenue Scotland to ensure that officers who exercise particular powers are sufficiently senior or specialist without unnecessarily complicating arrangements.
I move amendment 80.
Amendment 80 agreed to.
Section 57, as amended, agreed to.
Section 58 agreed to.
Section 59—Meaning of “artificial”
I will deal with Mr Mason’s question first. The bill contains a power to apply an inflation adjustment by regulation, so discretion is available. Action would have to be taken—it would not happen automatically—but a power could be used to apply an inflation adjustment as appropriate.
As for Mr Brown’s point, the Government’s view is that we should establish a regime that errs heavily on the side of the proper reporting and disclosure of liability for tax purposes and prompt payment as a consequence. That is a good and sound general principle, which is reflected in the regime that we have set out in the bill in response to the committee’s representations. The bill also gives revenue Scotland discretion to allocate more time in exceptional circumstances, if it considers that necessary.
The bill strikes the correct balance—it emphasises prompt payment but allows discretion to be used in exceptional circumstances. In general, I think that Parliament’s view is that we should err on the side of encouraging prompt payment but leave room for discretion if it is absolutely required.
My sense is that we have struck the right balance. If the committee supports the amendments, I will certainly reflect further on the point that Mr Brown made. If he wishes to make further representations to me, I will be happy to consider them. If I do not believe that we have constructed the correct balance, I will be happy to lodge stage 3 amendments to alter the balance.
Amendment 168 agreed to.
Amendments 169 and 170 moved—[John Swinney]—and agreed to.
Section 150, as amended, agreed to.
After section 150
Amendments 171 to 178 moved—[John Swinney]—and agreed to.
Section 151—Penalty for failure to pay tax
Amendments 179 to 181 moved—[John Swinney]—and agreed to.
Section 151, as amended, agreed to.
After section 151
Amendments 182 to 186 moved—[John Swinney]—and agreed to.
Section 152—Interaction of penalties under section 150 with other penalties
Amendments 187 to 189 moved—[John Swinney]—and agreed to.
Section 152, as amended, agreed to.
Section 153—Interaction of penalties under section 151 with other penalties
Amendments 190 to 192 moved—[John Swinney]—and agreed to.
Section 153, as amended, agreed to.
Section 154—Reduction in penalty under section 150 for disclosure
Amendment 193 moved—[John Swinney]—and agreed to.
Section 154, as amended, agreed to.
Section 155—Suspension of penalty under section 151 during currency of agreement for deferred payment
Amendment 194 moved—[John Swinney]—and agreed to.
Section 155, as amended, agreed to.
Section 156—Special reduction in penalty under sections 150 and 151
Amendment 195 moved—[John Swinney]—and agreed to.
Section 156, as amended, agreed to.
Section 157—Reasonable excuse for failure to make return or pay tax
Amendments 196 and 197 moved—[John Swinney]—and agreed to.
Section 157, as amended, agreed to.
Section 158—Assessment of penalties under sections 150 and 151
Amendments 198 to 202 moved—[John Swinney]—and agreed to.
Section 158, as amended, agreed to.
Section 159—Time limit for assessment of penalties under sections 150 and 151
Amendments 203 to 205 moved—[John Swinney]—and agreed to.
Section 159, as amended, agreed to.
After section 159
Amendment 206 moved—[John Swinney]—and agreed to.
Section 160—Penalty for error in taxpayer document
This is reasonably similar territory to the other issues that we discussed earlier. There is a question of balance here. Section 210(1) makes it very clear that
“Where there is a review or appeal under this Part, any tax charged or penalty or interest imposed remains due and payable as if there had been no review or appeal.”
There is therefore clarity in subsection (1) that, even if a taxpayer has requested a review or an appeal, the liability to pay tax still crystallises. There is a need to address the circumstances in which that might not apply, given that subsection (1) is very clear that it applies in all circumstances. It comes down to a judgment between whether ministers should have the power to specify that in regulations or whether revenue Scotland should exercise its view on a case-by-case basis. The issue is whether any general schematic view should be taken or whether it should be left to the individual judgment on a case-by-case basis, which revenue Scotland is able to exercise by virtue of its general function of collecting and managing the devolved taxes.
10:30Mr Hepburn asked in what circumstances revenue Scotland would exercise that judgment. I can certainly think of at least two areas, one of which is hardship; revenue Scotland could receive material information that would inform its view on that question. The other is where there is the emergence of a point of law that is a reasonable point of debate and dispute.
There is certainly sufficient scope for revenue Scotland to take the view that some discretion should be applied on a case-by-case basis. The judgment on amendments 263 and 289 is whether there should be a more general provision giving us the option of providing for postponement through regulations. Clearly, it is a matter of judgment as to whether that is a relevant power for ministers to have. I am certainly very happy to look at this again in the light of the issues that the committee has raised. If there are any more points of detail that the committee wishes to draw to my attention, I will certainly consider them. In the light of those remarks, I will not press amendment 263.
Amendment 263, by agreement, withdrawn.
Section 210 agreed to.
Section 211—Settling matters in question by agreement
Amendments 264 and 265 moved—[John Swinney]—and agreed to.
Section 211, as amended, agreed to.
Section 212—Application of this Part to joint buyers
Amendment 266 moved—[John Swinney]—and agreed to.
Section 212, as amended, agreed to.
Section 213—Application of this Part to trustees
Amendments 267 and 268 moved—[John Swinney]—and agreed to.
Section 213, as amended, agreed to.
Sections 214 and 215 agreed to.
Section 216—General interpretation
Amendments 269 to 272 moved—[John Swinney]—and agreed to.
Section 216, as amended, agreed to.
Section 217 agreed to.
Schedule 5—Index of defined expressions
Amendments 273 to 276 moved—[John Swinney]—and agreed to.
Schedule 5, as amended, agreed to.
Section 218—Subordinate legislation
Amendments 277, 278, 310 and 279 moved—[John Swinney]—and agreed to.
The amendments in the group will broadly align the provisions that relate to appointments to the Scottish tax tribunals with the corresponding provisions in the Tribunals (Scotland) Act 2014, which Parliament recently endorsed. It would be inappropriate for serving members of the National Assembly for Wales or the Northern Ireland Assembly to be eligible for appointment as members of tax tribunals. Amendment 35 will disqualify them from appointment as such members.
I move amendment 28.
Amendment 28 agreed to.
Section 23, as amended, agreed to.
Section 24—Members
Amendment 29 moved—[John Swinney]—and agreed to.
Section 24, as amended, agreed to.
Schedule 2—The Scottish Tax Tribunals
Amendments 30 to 51 moved—[John Swinney]—and agreed to.
Schedule 2, as amended, agreed to.
Sections 25 and 26 agreed to.
Section 27—Decisions in the First-tier Tribunal
I shall first speak to amendment 98, together with amendments 99 to 104 and amendment 301.
Amendment 99 makes further provision about a person’s duty to keep and preserve records when they are liable to be registered for tax. It specifies what type of records must be kept, including records relating to material on a landfill site or part of a landfill site. Amendment 101 sets out the period for which such records must be kept and preserved.
Amendment 104 addresses a recommendation of the Delegated Powers and Law Reform Committee. It amends section 70 to introduce a power for the Scottish ministers to make regulations, subject to negative procedure, prescribing any conditions or exceptions to the form and means by which records may be preserved.
Amendment 301 repeals two sections of the Landfill Tax (Scotland) Act 2014 that are no longer required as a result of the amendments in this group. The other amendments are minor and consequential.
I shall now speak to amendment 105, together with amendments 106 to 110, 128, 129 and 310. At stage 1, I undertook to lodge a number of penalties amendments, in response to recommendations that both the Finance Committee and the Delegated Powers and Law Reform Committee made in their stage 1 reports, and also in response to views expressed by stakeholders.
These amendments relate to the penalties in section 71 and paragraph 5 of schedule 3 for failing to keep and preserve records. They specify the assessment and enforcement arrangements for those two penalties, as well as providing a power for revenue Scotland to waive the penalty if it is satisfied that there is a reasonable excuse on behalf of the person liable to the penalty. The amendments also introduce two regulation-making powers for the Scottish ministers to make further provisions about those two penalties. Those regulations will be subject to the affirmative procedure.
I move amendment 98.
Amendment 98 agreed to.
Amendments 99 to 103 moved—[John Swinney]—and agreed to.
Section 69, as amended, agreed to.
Section 70—Preservation of information etc
Amendment 104 moved—[John Swinney]—and agreed to.
Section 70, as amended, agreed to.
Section 71—Penalty for failure to keep and preserve records
Amendment 105 moved—[John Swinney]—and agreed to.
Section 71, as amended, agreed to.
After section 71
Amendments 106 to 109 moved—[John Swinney]—and agreed to.
Section 72—Further provision: land and buildings transaction tax
Amendments 110 and 111 moved—[John Swinney]—and agreed to.
Section 72, as amended, agreed to.
Section 73—Dates by which tax returns must be made
09:45
The amendments in the group relate to the penalty in section 181 for failing
“to comply with a requirement imposed by or under section 22 or 23”
of the Landfill Tax (Scotland) Act 2014. The provisions require the taxpayer, or prospective taxpayer, to notify revenue Scotland when they form the intention of engaging in or desisting from engaging in taxable activities. The amendments specify the circumstances under which the penalty is payable, the penalty amounts and how they are calculated, the enforcement and assessment arrangements and the discretionary powers that revenue Scotland will have in relation to that penalty.
The amendments also remove the regulation-making power specific to section 181(2) and replace it with a broader power for Scottish ministers to make further provision about penalties in chapter 5 of part 8 of the bill. That power will be subject to the affirmative procedure.
I move amendment 232.
Amendment 232 agreed to.
Amendments 233 and 234 moved—[John Swinney]—and agreed to.
Section 181, as amended, agreed to.
After section 181
Amendment 235 to 241 moved—[John Swinney]—and agreed to.
Section 182—Interest on unpaid tax
Amendments 242 moved—[John Swinney]—and agreed to.
Section 182, as amended, agreed to.
Sections 183 to 185 agreed to.
Section 186—Issue of tax demands and receipts
Amendment 243 moved—[John Swinney]—and agreed to.
Section 186, as amended, agreed to.
Section 187 agreed to.
Section 188—Certificates of debt
This group of amendments relates to review and appeals, and is entirely procedural. The intention is that any review should take place before an appeal to the tribunal. The amendments provide that a taxpayer cannot ask revenue Scotland to review a decision if he or she has already lodged a notice of appeal to the tribunal against it. Likewise, the taxpayer may not lodge an appeal if he or she has already asked revenue Scotland to carry out a review. If the taxpayer has entered into a settlement arrangement with revenue Scotland, he or she cannot either ask for a review or lodge an appeal against the decision.
Amendments 259 and 261 simply provide that an appellant must give notice of appeal directly to the tribunal and not to revenue Scotland.
I move amendment 252.
Amendment 252 agreed to.
Amendment 253 moved—[John Swinney]—and agreed to.
Section 199, as amended, agreed to.
Section 200—Notice of review
Amendments 254 to 256 moved—[John Swinney]—and agreed to.
Section 200, as amended, agreed to.
Sections 201 to 205 agreed to.
Section 206—Right of appeal
Amendments 257 and 258 moved—[John Swinney]—and agreed to.
Section 206, as amended, agreed to.
Section 207—Notice of appeal
Amendments 259 and 260 moved—[John Swinney]—and agreed to.
Section 207, as amended, agreed to.
Section 208—Late notice of appeal
Amendments 261 and 262 moved—[John Swinney]—and agreed to.
Section 208, as amended, agreed to.
Section 209 agreed to.
Section 210—Reviews and appeals not to postpone recovery of tax
Amendment 81, in the name of the cabinet secretary, is grouped with amendments 82 and 83.
Amendment 96, in the name of the cabinet secretary, is grouped with amendment 97.
Amendment 162, in the name of the cabinet secretary, is grouped with amendments 246, 248 to 251, 282 and 287.
10:00
The committee welcomes the increased consistency from having the penalties in the bill. How will inflation be dealt with? The penalty is fairly low but, over time, £100 will become worth less and less. We have seen penalties in some older Westminster legislation become almost meaningless. When the penalties are in the bill, how will they be reviewed over time?
The amendments in the group are part of the penalties amendments that I undertook to lodge at stage 1. The amendments relate to the penalties in sections 160, 162 and 163 for submitting inaccurate documents to revenue Scotland or for failing to take reasonable steps to notify it about a revenue Scotland underestimate of tax. They specify the circumstances under which those penalties are payable, the penalty amounts and how they are calculated. They also remove the three regulation-making powers in sections 160(7), 162(4) and 163(3) and replace them with a single regulation-making power for the Scottish ministers to make further provision on penalties in chapter 3 of part 8 of the bill. That power will be subject to the affirmative procedure, of course.
I move amendment 207.
Amendment 207 agreed to.
Amendments 208 and 209 moved—[John Swinney]—and agreed to.
Section 160, as amended, agreed to.
After section 160
Amendment 210 moved—[John Swinney]—and agreed to.
Section 161 agreed to.
Section 162—Penalty for error in taxpayer document attributable to another person
Amendments 211 to 213 moved—[John Swinney]—and agreed to.
Section 162, as amended, agreed to.
Section 163—Under-assessment by Revenue Scotland
Amendments 214 to 216 moved—[John Swinney]—and agreed to.
Section 163, as amended, agreed to.
After section 163
Amendments 217 to 220 moved—[John Swinney]—and agreed to.
Section 164—Special reduction in penalty under sections 160, 162 and 163
Amendment 221 moved—[John Swinney]—and agreed to.
Section 164, as amended, agreed to.
Section 165—Reduction in penalty under sections 160, 162 and 163 for disclosure
Amendment 222 moved—[John Swinney]—and agreed to.
Section 165, as amended, agreed to.
10:15Section 166—Assessment of penalties under sections 160, 162 and 163
Amendments 223 to 225 moved—[John Swinney]—and agreed to.
Section 166, as amended, agreed to.
After section 166
Amendment 226 moved—[John Swinney]—and agreed to.
Section 167—Penalties for failure to comply or obstruction
Amendment 227 moved—[John Swinney]—and agreed to.
Section 167, as amended, agreed to.
Sections 168 and 169 agreed to.
Section 170—Power to change amount of penalties under sections 167, 168 and 169
Amendment 263, in the name of the cabinet secretary, is grouped with amendment 289.
Amendment 244, in the name of the cabinet secretary, is grouped with amendments 245 and 300.
The amendments in this group provide for a different test to apply to the procedure for permitting an onward appeal from the upper tribunal, depending on whether the original appeal was heard in the upper tribunal at first instance. What is known as the second appeals test will apply in the fashion that the Parliament endorsed in the Tribunals (Scotland) Act 2014. If an appeal is heard in the upper tribunal at first instance, an appeal to the Court of Session on a point of law is permitted if the upper tribunal or the Court of Session agrees. If an appeal that is heard in the upper tribunal has already been heard in the first-tier tribunal, the upper tribunal or the Court of Session may agree that an onward appeal is permissible if it would raise an important point of principle or practice, or if there is another compelling reason to allow the appeal.
Amendments 58, 60 and 262 provide that if the tribunal refuses to allow a late appeal there is no right of onward appeal. Amendment 264 provides that a settlement agreement will be treated as a decision of the tribunal, but not in respect of a right of onward appeal.
I move amendment 58.
Amendment 58 agreed to.
Section 31, as amended, agreed to.
Section 32 agreed to.
Section 33—Appeal from the Upper Tribunal
Amendments 59 and 60 moved—[John Swinney]—and agreed to.
Section 33, as amended, agreed to.
Section 34 agreed to.
09:30Section 35—Procedure on second appeal
Amendments 61 and 62 moved—[John Swinney]—and agreed to.
Section 35, as amended, agreed to.
Sections 36 to 40 agreed to.
Section 41—Venue for hearings
Amendment 63 moved—[John Swinney]—and agreed to.
Section 41, as amended, agreed to.
Sections 42 and 43 agreed to.
Section 44—Award of expenses
Amendments 64 to 69 moved—[John Swinney]—and agreed to.
Section 44, as amended, agreed to.
Section 45 agreed to.
After section 45
Amendment 70 moved—[John Swinney]—and agreed to.
Section 46—Tribunal rules
Amendments 309 and 71 to 73 moved—[John Swinney]—and agreed to.
Section 46, as amended, agreed to.
Sections 47 and 48 agreed to.
Section 49—Proceedings and steps
Amendment 74 moved—[John Swinney]—and agreed to.
Section 49, as amended, agreed to.
Section 50—Hearings in cases
Amendments 75 and 76 moved—[John Swinney]—and agreed to.
Section 50, as amended, agreed to.
Section 51—Evidence and decisions
Amendment 77 moved—[John Swinney]—and agreed to.
Section 51, as amended, agreed to.
Section 52—Practice directions
Amendment 78 moved—[John Swinney]—and agreed to.
Section 52, as amended, agreed to.
Section 53 agreed to.
Section 54—Guidance
Amendment 79 moved—[John Swinney]—and agreed to.
Section 54, as amended, agreed to.
Sections 55 and 56 agreed to.
Section 57—The general anti-avoidance rule: introductory
I undertook to lodge the amendments in the group in response to recommendations that the committee made in its stage 1 report. The amendments will ensure that the charter imposes reciprocal obligations on revenue Scotland and the taxpayer and will require revenue Scotland to consult on the terms of the first charter and any subsequent revisions to the charter.
I move amendment 5.
Amendment 5 agreed to.
Amendments 6 to 9 moved—[John Swinney]—and agreed to.
Section 10, as amended, agreed to.
Sections 11 and 12 agreed to.
Section 13—Use of information by Revenue Scotland
Amendment 52, in the name of the cabinet secretary, is grouped with amendments 53 to 57, 63 to 70, 309, 71 to 79, 277 and 278.
Amendment 207, in the name of the cabinet secretary, is grouped with amendments 208 to 226, 284 and 312.
Amendment 280, in the name of the cabinet secretary, is grouped with amendment 291.
Amendment 10, in the name of the cabinet secretary, is grouped with amendments 11 to 27 and 292.
During the committee’s evidence sessions at stage 1, the Law Society of Scotland and others questioned the need for section 68 as currently drafted. In particular, they did not feel that it was appropriate to have a section on taxpayer duties when there was no corresponding section on revenue Scotland duties. Although section 68 was intended only as an index, rather than to impose duties, I accept that that caused some concern. I therefore propose to remove section 68.
I move amendment 96.
Amendment 96 agreed to.
Section 67, as amended, agreed to.
Section 68—Taxpayer duties
Amendment 97 moved—[John Swinney]—and agreed to.
Section 69—Duty to keep and preserve records
Section 188 makes provision for a designated officer to issue a certificate of debt that a sum payable to revenue Scotland has not been paid. Amendments 244 and 245 make further provision for designated officers to issue certificates that no return or notice has been made.
The importance of the certificates is that, on the strength of them, revenue Scotland can obtain summary warrants under section 190, which are immediately enforceable against taxpayers who owe it money.
Similar provision for those two types of certificates is already made in section 28 of the Landfill Tax (Scotland) Act 2014. Amendment 300 will repeal that section, in consequence of amendments 244 and 245.
I move amendment 244.
Amendment 244 agreed to.
Amendment 245 moved—[John Swinney]—and agreed to.
Section 188, as amended, agreed to.
Sections 189 to 194 agreed to.
After section 194
Amendment 246 moved—[John Swinney]—and agreed to.
Section 195 agreed to.
Section 196—Power to change amount of penalty under section 195
Amendment 247 moved—[John Swinney]—and agreed to.
Section 197 agreed to.
Section 198—Appealable decisions
Amendments 248 to 251 moved—[John Swinney]—and agreed to.
Section 198, as amended, agreed to.
Section 199—Right to request review
Section 210 provides that any tax, penalty or interest is payable in advance of a review or an appeal but allows ministers to bring forward regulations providing for the postponement of tax, penalties or interest pending a review or appeal. However, in relation to both land and buildings transaction tax and landfill tax, I believe that it is right that any tax that is due and any associated penalties and interest should be paid immediately. It will not therefore be necessary to bring forward regulations providing for postponement, although revenue Scotland will of course be able to exercise its discretion to allow postponement on a case-by-case basis.
I move amendment 263.
The regulation-making power in section 102 is currently subject to the affirmative procedure, but only where the regulations amend primary legislation. At stage 1, the Delegated Powers and Law Reform Committee recommended that the regulation-making power in section 102 should always be subject to the affirmative procedure, to bring it into line with the other regulation-making powers in the bill involving penalties, all of which are already subject to the affirmative procedure. I accepted the committee’s recommendation and gave an undertaking to lodge the necessary amendments at stage 2. Amendments 280 and 291 give effect to that commitment.
I move amendment 280.
Amendment 280 agreed to.
Like the amendments in the previous group, the amendments in this group broadly align the procedures and administration of the tax tribunals that are implicit in the bill with the corresponding provisions in the Tribunals (Scotland) Act 2014.
I draw the committee’s attention in particular to amendments 53 and 54, which address concerns that the committee raised in its stage 1 report. The amendments provide that the size of the panel that hears an appeal in the upper tribunal can be augmented at the discretion of the president of the tax tribunals.
Amendments 70 and 278 provide that the Scottish ministers may, by regulation, provide for offences and penalties in relation to the proceedings of the tax tribunals. The power is aligned to the corresponding power available to the Scottish ministers under the 2014 act.
I move amendment 52.
Amendment 52 agreed to.
Section 27, as amended, agreed to.
Section 28—Decisions in the Upper Tribunal
Amendments 53 and 54 moved—[John Swinney]—and agreed to.
Section 28, as amended, agreed to.
Section 29—Declining jurisdiction
Amendment 55 moved—[John Swinney]—and agreed to.
Section 30 agreed to.
After section 30
Amendments 56 and 57 moved—[John Swinney]—and agreed to.
Section 31—Appeal from the First-tier Tribunal
Amendment 80, in the name of the cabinet secretary, is grouped with amendments 87 to 91, 94, 95, 131, 275 and 276.
The amendments in the group relate to the general anti-avoidance rule in part 5. I have made it clear that we intend to take the toughest possible approach to tax avoidance. I am delighted that the committee supported that approach in its stage 1 report. The committee recommended that we should further strengthen condition B of the general anti-avoidance rule. That position was also supported by the Scottish Trades Union Congress and Unison. These amendments are designed to do exactly that.
Amendments 81 and 82 provide that condition B will be satisfied if a tax avoidance arrangement lacks either economic or commercial substance—not just commercial substance. Amendment 83 adds a further factor, which might indicate that an arrangement lacks economic or commercial substance, which is where it results in a tax advantage that is not reflected in the business risks undertaken by the taxpayer. The amendments further reinforce the very robust approach that we intend to take to any form of artificial tax avoidance.
I move amendment 81.
Amendment 112, in the name of the cabinet secretary, is grouped with amendments 113 to 116, 119, 279, 295, 296 and 298.
Okay, folks. I reconvene the meeting—we are back on track.
Section 85 agreed to.
Section 86—Determination of tax chargeable if no return made
Amendment 122 moved—[John Swinney]—and agreed to.
Section 86, as amended, agreed to.
Sections 87 to 95 agreed to.
Section 96—Assessment procedure
Amendments 123 and 124 moved—[John Swinney]—and agreed to.
Section 96, as amended, agreed to.
Sections 97 and 98 agreed to.
Section 99—Claim for repayment if order changing tax basis not approved
Amendments 125 to 127 moved—[John Swinney]—and agreed to.
Section 99, as amended, agreed to.
Sections 100 to 105 agreed to.
Schedule 3—Claims for relief from double assessment and for repayment
Amendments 128 to 130 moved—[John Swinney]—and agreed to.
Schedule 3, as amended, agreed to.
Sections 106 to 110 agreed to.
Section 111—Designated investigation officers
Amendment 131 moved—[John Swinney]—and agreed to.
Sections 112 to 116 agreed to.
Section 117—Approval of taxpayer notices and third party notices
Amendment 228, in the name of the cabinet secretary, is grouped with amendments 230, 231, 247, 285, 313 and 288.
Amendment 98, in the name of the cabinet secretary, is grouped with amendments 99 to 110, 128, 129, 310, 290 and 301.
Amendment 112 will remove the power for the Scottish ministers by regulations to define when a tax return must be made. Provision defining when tax returns have to be made is contained in the two tax-specific acts. It is therefore unnecessary to have the same power in the bill.
Amendments 114, 116 and 119 provide that, when a designated officer of revenue Scotland has amended a tax return under section 78 or section 84, the taxpayer cannot subsequently amend the return under section 74. In those circumstances, the taxpayer’s recourse would be to seek a review or to appeal the decision.
Amendment 115 will amend section 75 to reduce the time within which revenue Scotland may correct an obvious error or omission in a tax return from three years to 12 months. Given that the section deals only with obvious errors and omissions, I took the view that 12 months is probably sufficient to allow revenue Scotland to do that.
I move amendment 112.
Amendment 112 agreed to.
Amendment 113 moved—[John Swinney]—and agreed to.
Section 73, as amended, agreed to.
Section 74—Amendment of return by taxpayer
Amendment 114 moved—[John Swinney]—and agreed to.
Section 74, as amended, agreed to.
Section 75—Correction of return by Revenue Scotland
Amendment 115 moved—[John Swinney]—and agreed to.
Section 75, as amended, agreed to.
Sections 76 and 77 agreed to.
Section 78—Amendment of self-assessment during enquiry to prevent loss of tax
Amendment 116 moved—[John Swinney]—and agreed to.
Amendment 132, in the name of the cabinet secretary, is grouped with amendments 133 to 161, 163 to 165 and 227 to 229.
The amendments in the group remove the two order-making powers in sections 170 and 196 and replace them with a single regulation-making power for Scottish ministers to make further provision about penalties in chapter 4 of part 8 of the bill. That power will be subject to the affirmative procedure.
I move amendment 228.
Amendment 228 agreed to.
Sections 171 to 173 agreed to.
Section 174—Reasonable excuse for failure to comply or obstruction
Amendment 229 moved—[John Swinney]—and agreed to.
Section 174, as amended, agreed to.
Sections 175 and 176 agreed to.
Section 177—Increased daily default penalty
Amendment 230 moved—[John Swinney]—and agreed to.
Section 177, as amended, agreed to.
Sections 178 to 180 agreed to.
After section 180
Amendment 231 moved—[John Swinney]—and agreed to.
Section 181—Penalty for failure to register for tax
I invite the cabinet secretary to move amendments 282, 283, 311, 284, 312, 285, 313, 286, 314 and 287 to 291 en bloc.
Amendment 58, in the name of the cabinet secretary, is grouped with amendments 59 to 62, 262 and 264.
I thank the cabinet secretary for responding to the committee’s recommendation on this, as on other matters. The committee also recommended in paragraph 38 of its report that reasonable business conduct be extended to cover reasonable personal conduct. The example cited by the committee in its report was the matter of a personal gift that has no commercial substance and would not normally be employed in reasonable business conduct. Why did the cabinet secretary not take on board that particular aspect of the committee’s recommendation?
This group makes procedural changes to the circumstances in which decisions taken by revenue Scotland are to be appealable. For example, amendment 248 provides that a decision of revenue Scotland under section 61 to make adjustments to counteract a tax advantage is an appealable decision. Amendments 249 and 250 will ensure that any decision in relation to a penalty is appealable, including decisions on the amount of the penalty and whether to suspend a penalty.
Amendments 162, 246, 282 and 287 provide affirmative order-making powers for the Scottish ministers to modify the list of non-appealable decisions in section 144 and to specify additional circumstances in which decisions in relation to notices given under section 193 may be appealable.
I move amendment 162.
Amendment 162 agreed to.
Section 145 agreed to.
Section 146—Offence of concealing etc documents following information notice
Amendments 163 and 164 moved—[John Swinney]—and agreed to.
Section 146, as amended, agreed to.
Section 147—Offence of concealing etc documents following information notification
Amendment 165 moved—[John Swinney]—and agreed to.
Section 147, as amended, agreed to.
Section 148—Penalties: overview
Amendment 166 moved—[John Swinney]—and agreed to.
Section 148, as amended, agreed to.
Section 149—Double jeopardy
Amendment 167 moved—[John Swinney]—and agreed to.
Section 149, as amended, agreed to.
Section 150—Penalty for failure to make returns
Amendment 252, in the name of the cabinet secretary, is grouped with amendments 253, 254, 256 to 259 and 261.
The group concerns part 3, which is on information. Section 13 allows revenue Scotland and persons to whom it delegates any of its functions—that is, Registers of Scotland and the Scottish Environment Protection Agency—to share information with each other in connection with their statutory functions, including land registration and environmental functions. Section 15 imposes a duty on officials who exercise tax functions to maintain the confidentiality of taxpayer information, and the bill provides that the wrongful disclosure of protected taxpayer information will be a criminal offence.
The amendments in the group will clarify the detail of those arrangements and provide additional safeguards by modifying the legislation that governs Registers of Scotland and SEPA to ensure that protected taxpayer information can be disclosed only in appropriate given circumstances. With the addition of the amendments, part 3 will strike the right balance between allowing information to be shared between the relevant agencies for the proper exercise of their functions and properly protecting the confidentiality of taxpayer information.
I move amendment 10.
Amendment 10 agreed to.
Amendments 11 to 15 moved—[John Swinney]—and agreed to.
Section 13, as amended, agreed to.
Section 14—Protected taxpayer information
Amendments 16 to 19 moved—[John Swinney]—and agreed to.
Section 14, as amended, agreed to.
Section 15—Confidentiality of protected taxpayer information
Amendments 20 to 24 moved—[John Swinney]—and agreed to.
Section 15, as amended, agreed to.
Section 16—Protected taxpayer information: declaration of confidentiality
Amendment 25 moved—[John Swinney]—and agreed to.
Section 16, as amended, agreed to.
After section 16
Amendments 26 and 27 moved—[John Swinney]—and agreed to.
Sections 17 to 22 agreed to.
Section 23—Temporary President
I was just a bit surprised by that. It seemed rather harsh not to have any provision for appeals. Obviously, there could be cases where an appeal is being used as an excuse to postpone payment but, equally, an appeal might well have merit and the taxpayer might even be suffering hardship.
I was interested in the cabinet secretary’s comments about landfill tax and land and buildings transaction tax, but surely the bill is supposed to refer to any future taxes as well—those two taxes are not mentioned specifically in section 210. It seems rather harsh that there should be no provision for postponement with a review or appeal, because it may well be that revenue Scotland will sometimes make mistakes.
Amendment 28, in the name of the cabinet secretary, is grouped with amendments 30 to 48.
Amendment 117, in the name of the cabinet secretary, is grouped with amendments 120, 122 to 124, 242 and 243.
Our view is that the definition of the amendments—by adding in economic substance as well as commercial substance—would address the issue that the committee raised in its report. We consider that the amendments are sufficiently broad in scope to capture the scenario and issues that Mr Chisholm raises.
I am certainly happy to reflect further on that in the light of the point that Mr Chisholm has made to satisfy myself that the aspiration that we have set out in the bill of establishing a high level of intolerance of tax avoidance is met by the provisions that we have put in the bill. If there is a necessity to bring forward further provisions at stage 3, I will consider doing so.
Amendment 81 agreed to.
Amendments 82 and 83 moved—[John Swinney]—and agreed to.
Section 59, as amended, agreed to.
Section 60 agreed to.
Section 61—Counteracting tax advantages
Amendment 168, in the name of the cabinet secretary, is grouped with amendments 169 to 206, 283 and 311.
Amendment 232, in the name of the cabinet secretary, is grouped with amendments 233 to 241, 286 and 314.
Amendment 263 removes sections 210(2) and 210(3). As it stands, subsection (2) gives the Scottish ministers the power to make regulations providing for the postponement of any tax, penalty or interest pending review or appeal. It does not force ministers to do so; it gives them the option, should they choose, to make such regulations. The Government’s position, as of today, is that it does not think that it would want to do so. However, this Government and future Governments might change their mind. I am therefore not sure that there is anything to be gained by removing subsections (2) and (3). If the Government genuinely reaches the view that it does want to bring in regulations, it simply does not have to do so. I do not see the harm in retaining subsections (2) and (3). To follow on from what Mr Chisholm said, it might be unduly harsh in some cases for taxpayers not to have a degree of flexibility. I urge the cabinet secretary not to press amendment 263.
I do not want to move amendment 289. It is in the same bracket as amendment 263, which I opted to withdraw.
Amendments 282, 283, 311, 284, 312, 285, 313, 286, 314, 287 and 288 moved—[John Swinney]—and agreed to.
Amendment 289 not moved.
Amendments 290 and 291 moved—[John Swinney]—and agreed to.
Section 218, as amended, agreed to.
Sections 219 and 220 agreed to.
Schedule 4—Minor and consequential modifications
Amendments 292 to 305 moved—[John Swinney]—and agreed to.
Amendment 84, in the name of the cabinet secretary, is grouped with amendments 85, 86, 92 and 93.
These amendments provide further detail about when additional tax that is due as a result of a revenue Scotland amendment, determination or assessment must be paid. Amendment 242 provides that interest is payable on any outstanding amount of tax from the relevant date until it is paid. The relevant date will be a date that is set by the Scottish ministers in regulations.
Amendment 243 provides that revenue Scotland will provide a receipt for any amount of tax that is paid in all circumstances and not only if the taxpayer requests one.
I move amendment 117.
Amendment 117 agreed to.
Section 78, as amended, agreed to.
Sections 79 to 83 agreed to.
Section 84—Completion of enquiry
I agree with the cabinet secretary that it is obviously important to get tax and penalties paid when they are owed. That came out in the considerable evidence that we took over stage 1 and I think that it is broadly where the committee is as well. The discretion that revenue Scotland can exercise in these circumstances might be important, and that will obviously be subject to ministerial direction. Will the cabinet secretary set out the circumstances in which revenue Scotland might exercise such discretion in these areas?
Amendment 306, in the name of the cabinet secretary, is in a group on its own.
As I said in the context of the amendments in group 13, during stage 1 I undertook to bring the detail of the penalties regime into the bill. This group of amendments relates to the penalties in sections 150 and 151 for failing to make a tax return or pay tax on time. They specify the circumstances under which either penalty is payable and the penalty amounts. They also tidy up the wording in sections 152 to 159.
The amendments also remove the two regulation-making powers in section 150(2) and section 151(2), replacing them with a single regulation-making power for the Scottish ministers to make further provision about penalties in chapter 2 of part 8 of the bill. Any such regulations will be subject to the affirmative procedure.
I move amendment 168.
Amendment 118, in the name of the cabinet secretary, is grouped with amendments 121, 130, 255 and 260.
I welcome the Government’s approach to penalties and its decision to put penalties in the bill.
The committee has had representation on amendments 179 to 186 that questions the reason for making the penalty payable, if tax is outstanding, the day after the due date. The representation that we have received suggests that that will be a little harsh on the taxpayer on some occasions, particularly if there has been a genuine oversight or error or if there has been a bureaucratic error by revenue Scotland or those who collect the tax. What is the Government’s thinking on going for the day after? Could the Government be flexible on that issue and reflect on it before stage 3?
Amendment 306 makes a minor additional amendment to the Tribunals (Scotland) Act 2014 to ensure that, at the appropriate time, the tax tribunals will be able to transfer into the new unified tribunals established by that act.
I move amendment 306.
Amendment 306 agreed to.
Schedule 4, as amended, agreed to.
Sections 221 to 223 agreed to.
Section 224—Commencement
Our second item of business is stage 2 consideration of the Revenue Scotland and Tax Powers Bill. We are joined by the Cabinet Secretary for Finance, Employment and Sustainable Growth and by Mr Colin Miller and Mr Greig Walker, who are officials from the Scottish Government team. Members should note that, as officials cannot speak on the record at stage 2, all questions should be directed to the cabinet secretary.
The bill is lengthy and we have more than 300 amendments to dispose of. The cabinet secretary will give evidence to the Economy, Energy and Tourism Committee later this morning, so proceedings on the bill will have to be concluded by around 11.15. I do not intend to set a target, but we shall attempt to make as much progress on the bill as possible today.
Members have copies of the marshalled list of amendments and the groupings of amendments. We will take each amendment on the marshalled list in turn.
I formally welcome the cabinet secretary and his officials to the meeting.
Sections 1 and 2 agreed to.
Schedule 1—Revenue Scotland
Amendment 1, in the name of the cabinet secretary, is in a group on its own.
These amendments will provide increased certainty for the taxpayer. When revenue Scotland has opened an inquiry and for whatever reason has not issued a closure notice, the taxpayer will be able to treat the inquiry as closed three years after the filing date or the date on which the return in question was made.
Amendments 255 and 260 make consequential changes.
I move amendment 118.
Amendment 118 agreed to.
Amendments 119 to 121 moved—[John Swinney]—and agreed to.
Section 84, as amended, agreed to.
Amendment 307, in the name of the cabinet secretary, is grouped with amendment 308.
Amendment 1 deals with the issue that it would be inappropriate for serving members of the National Assembly for Wales or the Northern Ireland Assembly to be eligible for appointment as members of revenue Scotland. The amendment will have the effect of disqualifying them from appointment. Members of the Scottish Parliament, the House of Commons and the House of Lords are among others who are already disqualified.
I move amendment 1.
Amendment 1 agreed to.
Schedule 1, as amended, agreed to.
Section 3—Functions of Revenue Scotland
I will suspend the meeting for a wee minute, because there is an anomaly between what I have in front of me and what the clerk has.
09:50 Meeting suspended.
Among the detailed technical provisions of schedule 4 are amendments to provide that references to “the Tax Authority” in the Land and Buildings Transaction Tax (Scotland) Act 2013 and the Landfill Tax (Scotland) Act 2014 mean “Revenue Scotland” as constituted by the Revenue Scotland and Tax Powers Bill. The amendments in this group ensure that the necessary change is made the day after royal assent.
I move amendment 307.
Amendment 307 agreed to.
Amendment 308 moved—[John Swinney]—and agreed to.
Section 224, as amended, agreed to.
Section 225 agreed to.
Long title agreed to.
Amendment 2, in the name of the cabinet secretary, is grouped with amendments 4, 6, 7, 29, 49 to 51, 111, 125 to 127, 166, 167, 265 to 274, 293, 294, 297, 299 and 302 to 305.
The amendments in the group are all minor technical and drafting amendments. Perhaps the most significant of them are those that relate to section 3, which sets out revenue Scotland’s statutory functions, and to section 10, which relates to the charter of standards and values.
In response to recommendations from stakeholders, we lodged an amendment to section 3 to make it clear that references to persons to whom revenue Scotland must provide information and assistance include taxpayers and their agents. The same amendments will be made to section 10 to ensure that the charter that revenue Scotland must prepare specifically addresses taxpayers and their agents.
I move amendment 2.
Amendment 2 agreed to.
That ends stage 2 consideration of the bill. I thank everyone for their perseverance during today’s proceedings. Members should note that the bill will now be reprinted as amended. The Parliament has not yet determined when stage 3 will take place, but members may now lodge stage 3 amendments with the legislation team. Members will be informed of the deadline for amendments once it has been determined.
I thank the cabinet secretary for his attendance and contributions today, and I thank his officials for coming to the committee.
10:40 Meeting suspended.
10:55
On resuming—
The committee has now been joined by Jean Urquhart and by Ian Young and John St Clair, who are the cabinet secretary’s officials.
Amendment 3, in the name of the cabinet secretary, is in a group on its own.
The arrangements that we are putting in place for revenue Scotland include an emphasis on providing opportunities for disputes to be settled quickly without the need for expensive and time-consuming legal proceedings. One of those opportunities is the provision for revenue Scotland and the taxpayer to enter into independent, third-party mediation. The purpose of amendment 3, which makes specific reference to mediation among revenue Scotland’s statutory functions, is to underline the importance that Parliament attaches to that provision.
I move amendment 3.
Amendment 3 agreed to.
Section 3, as amended, agreed to.
Sections 4 to 7 agreed to.
Section 8—Ministerial guidance
Amendment 4 moved—[John Swinney]—and agreed to.
Section 8, as amended, agreed to.
Section 9 agreed to.
Section 10—Charter of standards and values
Amendment 5, in the name of the cabinet secretary, is grouped with amendments 8 and 9.