The Scots ICA will attempt a last-ditch effort to change governmentto demand that they spell out to ministers the full cost of implementing the variable rate. policy on the ‘tartan tax’ at a meeting on 6 July.
The institute will confront ministers with the full scale of the task of introducing the tax. The Scots want to pass on their concerns, which include the high cost of collecting the new tax, to Scottish home affairs and devolution minister Henry McLeish.
Next month’s meeting follows a series of informal exchanges with the government.
Derek Allen, the institute’s taxation director, said some clauses in the bill proposing the Scottish variable rate were badly written and failed to clearly identify Scottish residency. The test of nationality – spending 183 days a year in Scotland – was ambiguous, said Allen.
If the Scottish parliament exercises its full powers and adds 3p in the pound to the basic rate of income tax, it would raise #450m from 1.67 million taxpayers.
The Revenue has proposed a register of taxpayers at a set-up cost of #15m. Annual maintenance could cost #13m a year, while the total cost of annual operation could reach #20m. Including collection, this would represent nearly 7.5p in the pound compared to 1.5p in the rest of the UK.
The Revenue said it expected start-up costs of #10m and annual bills of #8m but could only fully cost it once the legislation was in place.
As well as a large number of Scots working outside Scotland, a further 19,000 organisations have been identified which employ Scots but are not classed as Scottish organisations. The net could spread still wider to some of the 950,000 companies based in the UK with Scottish employees.
Allen said: ‘Employers will have to buy software they may never use.’ The Scots ICA has lobbied the House of Lords which is set to consider a second reading of the devolution bill by mid-July. Allen added: ‘We’ve done the best we can but we are close to saying “we told you so”.’
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