New rules ‘taxing’

Complicated government plans to force taxpayers who spend ation of who will be taxed, and why, according to the Scottish Parliament’s proposed revenue-raising powers. considerable amount of their time in Scotland to keep on-going records of their whereabouts should be ditched, Deloitte & Touche claimed this week.

The demand came as the clauses of the Scotland Bill dealing with the new Scottish Parliament’s tax-varying powers are set to be debated on Tuesday.

From April 2000, the Scottish Parliament can vary the basic rate of tax for ‘Scottish’ taxpayers by up to 3p. If the full 3p tax was levied it could cost taxpayers up to #660 each.

But David Sinton, head of Deloittes’ tax in Edinburgh, said the new rules would be too complex. Under the current proposals, a person who is resident in the UK, and either has a principal home in Scotland or spends as many days in Scotland as he spends elsewhere in the UK is defined as a Scottish taxpayer.

‘This day-count test is complex, costly and burdensome for the government and individual taxpayers,’ Sinton said.

‘It is also likely to create numerous anomalies.’

Sinton demanded a simpler test, suggesting: ‘The tax test that counts the days spent in Scotland should be abolished and replaced by a test based solely on the location of the principal home, building on the default test already incorporated in the Scotland Bill.’

Under Sinton’s proposal, the tax-varying powers would only apply to taxpayers with their principal home in Scotland. ‘This means people can budget for the tax with reasonable certainty and employers know when to deduct the tax, as their status is established at the beginning of the year.’

The system would also eliminate a host of problems thrown up by cross-border workers – those who commute to Scotland – and workers on North Sea oil rigs. Sinton added the scheme would cut compliance costs and allow the Inland Revenue to operate a Scottish tax system based largely on home addresses.

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