THE ANNOUNCEMENT by Holyrood that it is to establish its own tax agency by 2015 has already raised eyebrows on both sides of the border.
The body is to be called, aptly enough, Revenue Scotland and, following the devolution of tax powers – including stamp duty land tax and landfill tax – in the Scotland Act, will be set up in 2015, when the powers come in.
Indeed, the body will come in with claims of being "digital first", promising to "simplify processing and reduce late payment".
Those are big claims, against a backdrop of scepticism.
Some weeks ago, ICAS had already queried the proposals for Scotland raising its own taxes, and questioned who would run such services as well as the wisdom of progressive and flat-based taxes.
Holyrood now seems to have answered that question, and is bullish about managing its own affairs, at least financially – if not as a fully independent state.
Crucially, Edinburgh claims it would be cheaper to administer and collect tax itself, rather than have HM Revenue & Customs take care of it.
That said, HMRC are somewhat nonplussed by that assertion, having been unsure of how Scotland intended to use the powers devolved to them.
The taxman had, however, delivered indicative estimates in private of costs to provide a full service for a Scottish land transaction tax similar to stamp duty land tax and landfill tax, including on-line filing, back-office functions and compliance support.
Practically, the implications are equally unclear. Starting a new Revenue office for Scotland from scratch affords it the opportunity to fine-tune itself to the needs of Scottish people from the word go and provide a sleek, efficient service.
For some – including Deloitte's Euan Sutherland – there is logic to introducing the body based on the fact that newly levelled taxes passed by Edinburgh would be applicable only to Scotland.
However, the Scottish parliament's track record for estimating the cost of new projects is not famously accurate. Holyrood itself is testament to that, and woe betides anyone who asks locals about Edinburgh's tram system.
For many, Revenue Scotland is about a more long-term aim: Scotland equipping itself with established, well-oiled infrastructure for independence, if and when it comes.
And for accountants, it will, of course, mean more work – through understanding a new set of tax laws and processes. This would need to be reconciled with their clients, whose affairs might cross the borders.
It would depend on what rights the agency has when it opens its doors, and whether it will set its own tax laws. Initially, stamp duty land tax and landfill tax will form the centre of its responsibilities, but powers to levy other taxes could follow.
The issues this would raise would be numerous. In terms of income tax, a Scottish taxpayer is likely to be defined as someone whose place of residence is in Scotland. Of course, if you have more than one property, a grey area occurs, but there would be tests in place to determine the main residence.
Where businesses are concerned, it remains to be seen whether corporations will be taxed on the basis of where they're registered; whether this should include all those registered through Companies House in Scotland, or all companies with operations in Scotland, including the self-employed.
While it is a significant step, simplifications will certainly be sought, and doubtless Holyrood will seek to operate a simple system. The silver lining, of course, is that there is time to address these issues. But currently, there are plenty of questions, all of which require firm, unambiguous answers.
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