Transfer of income tax powers to Scotland may be delayed

THE TRANSFER of income tax powers to Edinburgh may not be completed in time for Scottish finance minister John Swinney’s Budget to Holyrood in January, HM Revenue & Customs has warned.

An HMRC risk analysis obtained by The Scotsman highlights several areas of concern ahead of the introduction of the powers next April.

The delay could lead to disruption of the system, with insufficient time to inform Scottish taxpayers of the new rates.

The assessment forms part of the work undertaken by HMRC, Westminster and Holyrood to prepare for the new rates after the Scotland Act 2012 gave Edinburgh control over the 10p and 20p basic rate.

The current Scotland Bill contains even greater powers from the Smith Commission which will give Holyrood control over all income tax on wages and earnings north of the border, including an ability to vary the UK bands.

According to the assessment from HMRC, identifying Scottish taxpayers remains the chief area of concern, while issuing notifications to Scottish taxpayers in time is also a significant source of potential trouble.

Labour’s shadow Scottish Secretary Ian Murray said distrust between the Scottish and UK governments was impeding progress on the issue.

He told The Scotsman: It’s not good enough for either of our governments to blame each other for these problems. They have shared responsibility for the delivery of these new powers, and shared responsibility to make sure they are fully operational next year.

“It’s concerning that just seven months away from the deadline, it still looks like there are unresolved problems. It is time for the UK and Scottish governments to get a grip.”

HMRC told Accountancy Age the production of risk registers is routine.

A spokesman for the tax authority said: “Preparations are on track to bring the Scottish rate of income tax into effect from April 2016 as planned, at which point the Scottish government becomes responsible for setting the level.”