The UK Supreme Court has found that sections 1 and 9 of the Tobacco and Primary Medical Services (Scotland) Act 2010 are within  the legislative competence of the Scottish Parliament.

(Section 1 of the 2010 Act prohibits the display of tobacco products in a place where tobacco products are offered for sale. Section 9 prohibits vending machines for the sale of tobacco products)

A summary of the judgement is available from the Supreme Court here.

The full judgement is available here.

Let’s start with an issue that is at last beginning to reach the top of the political agenda, tax avoidance.

The UK National Audit Office has released a report suggesting that HMRC is being “overwhelmed” by the scale of tax avoidance, claiming that the UK is losing out by more than £10bn in lost tax revenue.  The Comptroller and Auditor General, Amyas Morse, stated: “HMRC must push harder to find an effective way to tackle the promoters and users of the most aggressive tax avoidance schemes”.  But according to the NAO, between 2004 and 2011 approximately 2,300 avoidance schemes were disclosed to HMRC.  A report on this can be found on the BBC news website which can be found here.  The NAO report can be found here.

That shows the scale of the problem.

Then there is the sight of a number of Chief Executives from several of the world’s top companies giving evidence to the House of Commons Public Accounts Committee on the issue of tax avoidance.  Representatives from Google UK, Starbucks and Amazon were answering questions on tax arrangements for multinational companies.  Their responses show how big business views this issue and interference by politicians.  More on this from the BBC news website can be found here.

Also on this issue.  The Managing Director of John Lewis, Andy Street has said that the failure to resolve the issue would risk driving UK firms out of business.  Street’s comments were aimed at Amazon, which is accused of failing to pay the correct rate of UK corporation tax. He said that UK companies would be “out-invested” and “out-traded” by the US-based internet retail giant.  More on this from the Telegraph can be found here.

There is also some evidence that HMRC is losing this “battle”.  The European Court of Justice has ruled that the UK Government must refund several UK-headquartered multinationals up to £5bn worth of corporation tax.  The companies, led by British American Tobacco, were found to have been treated unfairly by HMRC which retrospectively blocked tax refund claims dating as far back as 1973.  HMRC said it was “very disappointed” at the ruling.  Glad that it was not “happy”.  More on this, again from the Telegraph, can be found here.

Then there is the tax tribunal decision in favour of the former Rangers Football Club.   The decision of the first tier tribunal was not unanimous and HMRC is considering an appeal.  More on this from the Scotsman can be found here.

An example of what HMRC is trying to do also highlights the scale of its task.  HMRC has launched a taskforce to pursue landlords in the south east of England who fail to declare rental income.  It is expected to recover £4m out of the estimated £550m of tax evaded annually by landlords across the UK.  A press release from HMRC on this matter can be found here. 

The statement from UK Business secretary Vince Cable sums up nicely the quandary for politicians.  Cable has called for action against corporate tax avoidance but also stressed the need to encourage investment.  He pointed to anger amongst small and medium sized businesses that multinational corporations are able to avoid tax without consequence.  More on this from the Scotsman can be found here.

I liked this: “High-street shops turn fire on Amazon’s tax avoidance”.  More on this can be found here.

Now to the fiscal powers debate.

Edward Troup, the person responsible for the collection of the Scottish rate of income tax at HMRC, has told MSPs that the Scottish Government would have to pay the costs of any changes to the Scottish rate of income tax.  More on this from the Scotsman can be found here.  This is in fact one of the reasons why I think a tax needs to be devolved in its entirety.

Also on this issue, and some sensible observations by Iain Gray, convener of Holyrood’s Audit Committee.  Gray said that the Scottish Parliament must be able to exercise greater oversight of HMRC when the Scottish Parliament will become responsible for raising half the income tax in Scotland from 2016.   More on this from the Herald can be found here.

The Devo Plus group, which was set up by Reform Scotland, has published its latest paper on further powers that could be devolved to the Scottish Parliament as long as Scotland votes NO.  More on this from the Scotsman can be found here.  The paper  can be found here. Notable that the Conservative representative acknowledged that he was there in a personal capacity and not representing his party.  Ruth Davidson has of course made her opposition to further powers clear.  The problem with this approach is an obvious one.  Can anyone say with a degree of certainty that major powers will be devolved to Scotland if Scotland votes NO.  To see how far apart the opposing sides in the independence debate are have a look at one of my recent blogs.  This blog lists the tax powers that Westminster has already said no to.  My earlier blog can be found here. Even the Liberal Democrats, the party that historically has went the furthest on this issue, now wishes to devolve only a handful of additional tax powers.

Now to some commentary on the recent Institute for Fiscal Studies report on the economic possibilities of an independent Scotland.  The excellent piece by Ian Bell in the Herald can be found here.  The argument that Scotland’s oil wealth is a potential problem for Scotland is simply ridiculous.

The Times has reported that sales of homes valued between £2m and £5m in Greater London have fallen by 29% per cent in the third quarter, according to figures from the Land Registry.  I was interested to read that “industry experts” have blamed the fall on changes to stamp duty land tax in the last UK Budget.  London Central Portfolio, a high-end residential property investment fund, said: “The fall in transactions is almost definitely a result of the uncertainty and negative sentiment caused by the tax changes announced in the 2012 Budget”.  It seems that uncertainty can be caused by something other than the debate on Scottish independence. The report in the Times can be found here.

And finally to France.  The French Government has announced new measures against tax avoidance and fraud for companies and individuals. Failure to disclose the origin of offshore assets will attract an automatic 60% tax rate.  The French tax authorities will also demand an explanation of all individual payments exceeding €200,000.  Vive la France.

Where to start.

In a speech to mark her first year as Scottish Conservative leader, Ruth Davidson outlined an aspiration to cut income tax by more than 1p when new powers come to Holyrood.  More on this from the Scotsman can be found here.  Now compare this with a survey that claims that three quarters of Scots think taxes should be raised for those with the highest incomes and wealth. More on the survey from the Herald can be found here.  These stories show how Scotland, both the politicians and the general public, are beginning to wake up to the fact that tax is not necessarily just a UK matter.

The Scottish Government has backed the latest call for control over air passenger duty to be passed to the Scottish Parliament.  This is a matter worth remembering when you hear comments from the NO campaign on how they “hope” to give the Scottish Parliament further powers.  Let’s not forget how few tax powers are included in the latest Scotland Act.  It is “Calman minus” just as the Liberals recent Home Rule Commission is “Steel minus”.  More on this can be found here.

First it was Rangers now it is Hearts that is in trouble with HMRC.  The surprise is no-one is surprised.  Hearts owe HMRC approximately £500,000 in unpaid tax.  More on this from the Scotsman can be found here.

The UK Government seems to be doing a fair bit of thinking just now which is always worrying.

The UK’s Chancellor of the Exchequer, George Osborne, has called for a change in international tax standards to reflect changes in business, such as the rise of e-commerce, which makes it easier for companies to shift taxation away from jurisdictions where profit is being generated.  More on this from the Guardian can be found here.  In addition, Danny Alexander, the Chief Secretary to the UK Treasury, has pledged to crack down on corporate tax avoidance following revelations that the supermarket chain Asda may have used overseas transfers to its parent company Walmart to avoid up to £250m in tax.  More on this from the Times can be found here.  Lots of words but can we expect real action?

The Chief Executive of HMRC, Lin Homer, has been put under pressure by the UK Treasury Select Committee to explain why multinationals have been allowed to pay less tax than small businesses in the UK.  The Comptroller and Auditor-General of the National Audit Office, Amyas Morse, said that large companies often put pressure on HMRC by threatening to pull out of the country altogether.  More on this from the Times can be found here.  A connected story from the Daily Mail and involving Margaret Hodge, chairman of the UK Public Accounts Committee, can be found here.

Under “road charging” proposals being considered by the UK Government, motorists could face a new two-tier system in which drivers would pay a lower rate of tax if they do not use the UK’s trunk road network.  Have any of the UK media outlets considered the fact that this is also a matter for the Scottish Parliament?  Of course not.  The new system would comprise a basic charge for the use of local roads, and a secondary charge for those motorists wanting to use motorways and A-roads.  More on this from the Guardian can be found here.

Is it just me or is it really the case than almost every change in the law is met with the accusation that it breaches some part of EU law?  The latest example is the UK Government’s planned changes to child benefits.  The UK Treasury has dismissed the claims by the Institute of Chartered Accountants of England and Wales.  More on this from the Telegraph can be found here.

David Gauke, Exchequer Minister to the UK Treasury, has argued that HMRC needs to pay more to recruit the best tax experts in order to combat tax avoidance by major multinational companies.  Edward Troup, Director-General for Tax and Welfare at HMRC, welcomed the proposal, saying: “I think it’s on the record now to have more staff and higher pay”.  More on this from the Times can be found here.  This is an issue that we in Scotland will also have to respond to when setting up our own tax system.

It is often claimed that that the UK Government favours London and the south-east of England. This is another such claim.  The UK Communities Secretary, Eric Pickles, has faced criticism from property groups and retailers after his announcement that a revaluation of business rates has been pushed back to 2017.  The British Property Federation said that it was unfair to expect tenants to continue to pay a levy based on “top-of-the-market” 2008 rents. The UK Government argues however that a revaluation would lead to rate increases for many businesses, especially in the south-east.  More on this from Accountancy Age can be found here.

Now to a story that keeps bubbling up to the surface and clearly is not going away.  First it involved government officials such as the head of the Student Loans Company, then it was the BBC now it is teachers.  HMRC has said that supply teachers hired via recruitment agencies using off-shore firms are causing a shortfall in National Insurance contributions.  An HMRC spokesman said: “These kinds of arrangements are not compliant with tax and National Insurance legislation and the end client, or the employment businesses, may be liable for any underpaid tax and National Insurance”.  More on this from the BBC news website can be found here.

Anyone who regularly looks at HMRC press releases will see HMRC increasingly publicising stories such as this.  An Isle of Wight tax advisor who stole £52,000 by claiming tax repayments using his clients’ names was jailed today at Newport Crown Court.  The press release from HMRC can be found here.

Let’s end with matters slightly further afield.  Hong Kong has imposed a 15% emergency tax on foreign buyers of residential property in an attempt to hold back the island’s property bubble. Stamp duty for short-term speculators has also gone up from 15 to 20%.  Similar measures have been imposed by the Singaporean Government.  More on this from the excellent STEP Journal can be found here.

One last point.  Patriotism takes many forms and that includes paying your taxes.

Have a good week.

Let’s start with Gordon Brown’s comments and in particular his claim that devolving tax and fiscal powers to the Scottish Parliament automatically means a “race to the bottom” for tax rates and in particular business tax rates.  There are a number of problems with this statement.  I will simply point out two.  Tax competition already exists.  Not just within the European Union but throughout the world.  Then there is the fact that the underlying law, for example tax reliefs, are just as important as tax rates to business.  Creating a Scottish tax system is also a once in a generation chance to create a simpler and more progressive tax system.  This opportunity is not available to the UK.  Evidence that the present Scottish Government is already putting this opportunity into practice is shown by its excellent consultation on a Land and Buildings Transaction Tax.  My earlier blog on this can be found here. 

Again on tax powers for the Scottish Parliament.  I was disappointed, but sadly not surprised, to see another patronising picture accompanying an article in Tax Adviser on the subject of the tax powers being devolved to the Scottish Parliament.  First we had a man in a kilt holding a whisky bottle and this month a scene from the movie Braveheart.    

Now to some incredible news.  HM Treasury is going to employ someone in Scotland.  I wonder if this has anything to with a certain referendum.  Of course it does.  An article on this from the BBC news website can be found here.  I did find it amusing that the position ends shortly after the proposed referendum date.  I should not be so cynical.  It is good that HM Treasury is going to try and find someone to appease the natives.  I suspect they have run out of gunboats. 

Now to HMRC.  HMRC is clearly under strain.  In addition to having to deal with numerous devolution issues its budget is being reduced by 15% whilst having to increase tax revenues brought in by compliance activity by £7bn per year by 2014/15.  Not surprisingly HMRC staff have begun “working to rule” to highlight ‘problems caused by the job and budget cuts. 

I was also interested to see that HMRC has published a draft code of governance for resolving tax disputes.  This follows the controversy surrounding some corporate tax disputes of which it was accused of agreeing over-generous resolutions.  An article on this issue can be found here.  

Clearly the UK Government is keen to show it is clamping down on tax evasion.  HMRC has paid out more than £1m in rewards to tax evasion informants since the start of the financial crisis.  An article on this can be found here.  And just to reinforce the point HMRC has published its rogues gallery of tax evaders and fraudsters.  An article on this from the BBC news website can be found here.

Now to an issue I have blogged on recently.  The Office of the Scottish Charity Regulator is reportedly to investigate 50 private schools to see if they meet the “benefit to the public” criteria in order to maintain their charitable status.  An article on this from the Sunday Herald can be found here.  This is an issue that still needs to properly debated.     

Now to the strange world of caravans and an article from the Herald.  It seems that a little-known tax loophole is set to cost Scotland’s councils millions of pounds a year in revenue.  Each caravan in a caravan park can apply for rates relief, which in turn cuts the overall bill for the park considerably.  It seems that few people knew about this loophole until the owners of caravans in the Rosneath Castle Caravan Park, near Helensburgh, first began using it. The 300 caravan owners at the park have now bombarded the Clydebank business ratings assessors’ office with letters and phone calls, each seeking to save a few hundred pounds per year in council rates.  The article from the Herald can be found here. 

Now to the USA and news that the Democrats are split over estate tax reform.  Democratic Party members of the US Senate have rejected President Obama’s proposal for a 45% top rate of federal estate tax on individual estates worth more than $3.5m.  The tax will rise sharply at the end of this year if Congress fails to agree on reform.  An article on this from Bloomberg can be found here.

Tax is also an issue in the Presidential election.  The Democrats have succeeded in turning the finances of Republican presidential candidate Mitt Romney into a lead news story.  Pressure is growing on Romney to reveal tax returns.  There are accusations that he failed to disclose a Swiss bank account, and even that he participated in the US Internal Revenue Service’s 2009 offshore tax amnesty.  An article on this from Forbes can be found here.

Let’s finish with an old favourite.  It seems that there have been some financial transaction tax stirrings in both Korea and France.  In order to bring the taxation of derivatives in line with other earned income and introduce another revenue source, the Korean Government has announced plans to impose a transaction tax on index options and futures.  France has also partially implanted its own financial transaction tax.  Although a small start, covering only shares in larger companies, and at 0.2%, it’s still lower than UK stamp duty on which it is modelled. Articles on the Korean proposal can be found here and the French proposal here.

Have a good weekend.

Police are trying to establish the circumstances surrounding the death of a Glasgow man whose mother took him to a Swiss clinic to die.

Helen Cowie told BBC Scotland’s Call Kaye show she helped her son Robert, 33, commit suicide after he was left paralysed from the neck down.

Mrs Cowie, of Cardonald, Glasgow, said her son went to Dignitas in October and “had a very peaceful ending”.

The report from BBC News can be found here.

Last December the Scottish Parliament rejected plans to give terminally ill people the right to choose when to die.  Independent MSP Margo MacDonald’s End of Life Assistance Bill aimed to make it legal for someone to seek help to end their life.  The Bill was defeated by 85 votes to 16 with two abstentions.

The UK Government has announced that it will amend the Scotland Bill to give the Scottish Parliament increased financial powers.

This u-turn by the UK Government will allow the Scottish Parliament to issue bonds to access cash from the capital markets.

The press release issued by the Scotland Office is available here.