The May 2015 edition of Private Client Scotland is now available.  The ‘preview edition’ published in November 2014 can be found here. 

“In this edition the editorial looks at two manifesto pledges concerning the tax status of ‘non doms’ and a new inheritance tax relief and also the launch of the two new Scottish taxes. There is also an article on Revenue Scotland’s LBTT opinions policy.

Included in ‘Case reviews’ is the Judgement of Sheriff McCormick on the appointment of an attorney by an executor. ‘Professional updates’ include updates on the ‘Certification of Death (Scotland) Act’ and the Scottish Law Commission’s annual report. Lastly the ‘News items’ section includes stories that range from the average cost of a funeral to the introduction of ‘guardians’ in England and Wales for missing persons.”

If you would like to subscribe to Private Client Scotland please email me at james@legalknowledgescotland.com

1. Reform of income tax rates and bands. One option would be to create 10%, 20%, 30%, 40% and 50% income tax rates and bands. This would ensure a more progressive system of income tax and in particular removes the large gap between the 20% and 40% income tax rate and band. There was a similar issue with Stamp Duty Land Tax until the recent reforms by both Westminster and Holyrood.
2. Devolve control of the approval of charitable tax status to Revenue Scotland and OSCR.  A Scottish charity should not have to deal with both OSCR and HMRC when OSCR could easily deal with these tax matters.  Revenue Scotland have already done something similar with the two new Scottish taxes.  Registers Scotland are involved with the collection of the Land and Buildings Transaction Tax and SEPA is involved the collection of the Scottish Landfill Tax.
3. Reduce the rate of VAT charged on home repairs and improvements to 5%.  HM Treasury already allows this in the Isle of Man.
4. Allow Police Scotland and the Scottish Fire and Rescue Service to recover VAT.  This is another example of Scottish institutions being penalised by the UK Government when they wish to do things differently.  A previous example was the withholding of Attendance Allowance funding when the Scottish Parliament introduced Free Personal and Nursing Care.
5. Ensure that UK institutions must take Scots law and practice into consideration when dealing with international matters.  For example the United Nations Convention on the rights of persons with disabilities.  This directly impacts on our Adults with Incapacity legislation.
6. Devolve control of stamp duty on shares to the Scottish Parliament.  The Scottish Government could then abolish stamp duty charged on the sale of shares of Scottish registered companies.
7. Devolve control, complete control, of the Crown Estate, air passenger duty and aggregates levy by the end of 2015.  Control of income tax should also be devolved completely.  The new ‘shared’ income tax gives the Scottish Parliament almost no worthwhile control over income tax. All funds from fines, forfeitures and fixed penalties imposed by our courts and tribunals as well as sums recovered under the Proceeds of Crime legislation should also remain in Scotland.
8. Devolve control of inheritance tax to the Scottish Parliament.  It makes no sense for succession law to be controlled by the Scottish Parliament but not the main succession tax. This would also ensure that the reform of Scottish succession law can be done in a joined up manner.  Another reason to do this is tax simplification both in Scotland and the rest of the UK.  The applicable forms and guidance would no longer need to include explanations of the Scottish and the rest of the UKs laws of succession.  This argument can just as easily be made with a number of transport and environmental taxes.
9. The Scottish GAAR (General AntI-Avoidance Rule) which goes further than its UK counterpart as it targets artificial, not merely abusive schemes, should be made to apply throughout the UK.
10. Devolve control of the Annual Tax on Enveloped Dwellings to the Scottish Parliament so that the Scottish Parliament can abolish it.  It is not likely to be needed in Scotland now that we have a Scottish Land and Buildings Transaction Tax.  If the underlying issue were to become a problem in Scotland we can easily create our own anti-avoidance provision.

A big day in the journey towards a Scottish tax system.

Today the Scottish Parliament has two more economic levers, the Land and Buildings Transaction Tax (LBTT) and the Scottish Landfill Tax (SLfT).  Up till today the Scottish Parliament only has control of two minor taxes; council tax and business rates. The revenue from each of these taxes is approximately £2bn.  The revenue from LBTT will be approximately £300m and SLfT £100m.

The Scottish Government has also shown that it wishes to do things differently. The Scottish Government decided to not use HMRC to administer the new Scottish taxes and instead has adopted the innovative approach of using two existing Scottish public bodies to collect these new taxes. An idea first proposed by myself in 2005. That means that whilst Revenue Scotland will be the collection authority accountable to the Scottish Parliament, some powers will be delegated to the Registers of Scotland and the Scottish Environmental Protection Agency. The importance of the creation of Revenue Scotland should not be underestimated.

I wrote an article for the Journal of the Law Society of Scotland predicting much of this almost ten years ago.  This article an be found here.

Further evidence of how things are going to be done differently here in Scotland is a ‘General Anti-Avoidance Rule’ (GAAR) that is stronger than the UK version. The Scottish GAAR goes further than its UK counterpart as it targets artificial, not merely abusive schemes as with UK GARR.

Recent announcements from the Scottish Government on corporation tax, air passenger duty, reform of council tax and the re-introduction of the 50p rate of income tax also, I suspect, show that this is just the beginning.

The second edition of Private Client Scotland is now available.  The ‘preview edition’ published in November 2014 can be found here.  

“In this edition there are articles on the Scottish Government’s proposal to reform our law of succession and an update and hopefully some closure on the validity or otherwise of continuing Powers of Attorney made in the standard form recommended by OPG (Scotland). Included in ‘Case reviews’ is the decision of Sheriff Hammond that a relationship of approximately 13 months qualifies as ‘cohabitation’ for the purposes of section 25 of the Family Law (Scotland) Act 2006. ‘Professional updates’ include a link to HMRC’s December ‘Trusts and Estates newsletter’ and confirmation of a new and designated guardianship court sitting in Edinburgh. Lastly the ‘News items’ section includes stories that range from a new Cabinet Secretary for Justice to an unexpected tax bill for Boris Johnson.”

If you would like to subscribe to Private Client Scotland please email me at james@legalknowledgescotland.com

These new Practice Notes can be found in the ‘Know How’ section of the website.

This new Practice Note can be found in the ‘Know How’ section of the website.

These new Practice Notes can be found in the ‘Know How’ section of the website.

The second edition of Private Client Scotland is now available.  The ‘preview edition’ published in November 2014 can be found here. 

“In this edition there are articles on the Scottish Government’s proposal to reform our law of succession and an update and hopefully some closure on the validity or otherwise of continuing Powers of Attorney made in the standard form recommended by OPG (Scotland). Included in ‘Case reviews’ is the decision of Sheriff Hammond that a relationship of approximately 13 months qualifies as ‘cohabitation’ for the purposes of section 25 of the Family Law (Scotland) Act 2006. ‘Professional updates’ include a link to HMRC’s December ‘Trusts and Estates newsletter’ and confirmation of a new and designated guardianship court sitting in Edinburgh. Lastly the ‘News items’ section includes stories that range from a new Cabinet Secretary for Justice to an unexpected tax bill for Boris Johnson.”

If you would like to subscribe to Private Client Scotland please email me at james@legalknowledgescotland.com

This new Practice Note can be found in the ‘Know How’ section of the website.