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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Session 6: 13 May 2021 to 8 April 2026
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Displaying 3919 contributions

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Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

The fourth item on our agenda is consideration by the committee of reports prepared by the National Audit Office and the Auditor General for Scotland on the administration of Scottish income tax for the tax year 2022-23.

I welcome our witnesses: Stephen Boyle, the Auditor General for Scotland, who is joined by Mark Taylor, who is an audit director at Audit Scotland. I am very pleased to welcome from the National Audit Office Gareth Davies, the Comptroller and Auditor General, and Rebecca Mavin, who is a senior analyst.

We have quite a number of questions to put to you. I will ask Mr Davies to give us a statement but, before that, I invite the Auditor General to address the committee.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

Thank you. That is helpful. I now turn to Jamie Greene, at his first meeting of this committee.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

That is helpful. It might be that, in due course, we invite HMRC in and get into more of the detail on that. Perhaps the Auditor General would like to say a word on the issue.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

Some of the areas that we have discussed in the last hour would presumably fall within the remit of a Scottish income tax board that was seeking to be more strategic in its approach.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

Okay. We might not be able to rely on the minutes to help us to get to the bottom of that. Anyway, we go to Colin Beattie.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

I will move things swiftly along and invite Willie Coffey to ask some questions.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

I have a very quick question, which relates to this thing about third-party data checks to get assurance. The report says:

“1.4 million records (27.0% of records analysed) could not be corroborated by comparison with the third-party data.”

That seems to me to be quite a high number. Do you have any concerns about that, Mr Davies?

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

Thank you very much, indeed. The committee will be particularly interested in looking at the methodological approaches and the implications of greater divergence between the income tax systems of Scotland and the rest of the UK. Perhaps I could begin by putting an important question to you.

On the one hand, you say that HMRC estimates are reasonable, but, in paragraph 1.21 of the NAO report, you identify areas of methodology in which there is a degree of what we could call woolliness. You say:

“HMRC does not fully understand the causes of the over-estimate in 2021-22 and any socioeconomic factors contributing to the over-estimate may be different in 2022-23.”

You say that there is a big reliance on sample data in the revenue estimates and that pay as you earn and self-assessment amounts that are apportioned to Scotland do

“not reflect the differing proportions of each type of taxpayer between Scotland and the rest of the UK.”

I wrote to you last year about that, and I might return to it.

You say that PAYE assessments include areas that are not subject to Scottish income tax variation, such as dividend payments, savings interest and so on, and you note that assumptions are the basis of HMRC’s estimates of PAYE liabilities. Those are all holes in the methodology that you have identified. How does that provide you with the comfort to be able to say that what we have before us is reasonable?

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

We have made the point in previous years that it is important for parliamentarians to understand what is going on out there, because, in the end, that guides policy decisions and decisions around the Scottish budget and where income tax is set. That is why we are especially interested. I would be interested to hear from you about what you would do differently if you were in the shoes of HMRC.

Public Audit Committee

Administration of Scottish Income Tax 2022-23

Meeting date: 22 February 2024

Richard Leonard

To conclude that part of our questioning, are you saying that there is no figure or estimate for tax evasion or avoidance in Scotland?