Public Sector – Scots’ leisure scam attracts flak

Two Scottish local authorities are set to save more than #1.4m a year by using controversial tax schemes criticised by unions and politicians.

Advised by KPMG, Edinburgh City Council and West Lothian Council are exploiting a tax loophole by transferring their leisure facilities into charitable trusts to avoid paying VAT and rates on the businesses. They anticipate annual savings of #900,000 and #500,000 respectively.

Management committees, consisting of councillors, workforce representatives, user groups, and business community representatives, will run the leisure services affected.

Keith Jackson, head of Edinburgh’s management trust, said: ‘This idea is not particularly innovative. Our accountants carried out a review of the potential savings, and KPMG confirmed its effectiveness.’

The schemes have attracted flak from the public sector union Unison and the Scottish National Party, which says the plans constitute ‘privatisation by the back door’. Unison also claimed Chancellor Gordon Brown would close the loophole after his current review of tax avoidance schemes.

Jackson was undeterred. ‘KPMG looked at the White Paper, but its view is that the changes will not be implemented for three to five years.’

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