Scottish tax plans create additional complexity and anomalies, experts warn

Planned changes to Scottish rates of income tax would add further complexity to a system that is already difficult for taxpayers to understand, tax professionals said after Derek Mackay, cabinet secretary for finance and the constitution, set out Scotland’s draft budget on December 14.

“Complexity is the price Scots will pay for exercising devolved powers over income tax. Today’s announcement underlines the increasingly diverging nature of income tax between Scotland and the rest of the UK,” said Moira Kelly, chair of the Chartered Institute of Taxation’s Scottish Technical Committee. The proposals have the potential to “increase both the costs and complexity of administering Scottish income tax as well as throwing into the mix some interesting anomalies,” she said.

The changes would establish Scotland as “a country with a very distinct tax system from the rest of the UK,” said Lindsay Hayward, head of tax for PwC in Scotland.

My news story for Tax Analysts, December 15 (paywall)

Wales consults on tackling artificial tax avoidance arrangements

The Welsh government is consulting on anti-avoidance measures targeting land transaction tax (LTT) relief and artificial arrangements entered into to avoid tax.

The Welsh Revenue Authority, which is expected to be established next year, will be responsible for the collection and management of the LTT and will undertake most of the collection and management functions for landfill disposals tax. The new taxes will replace the U.K.’s stamp duty land tax and landfill tax from April 2018. The Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill, introduced in the National Assembly for Wales September 12, sets out measures to tackle avoidance of the devolved taxes.

Read more: My news story for Tax Analysts, 20 September (paywall).

Tax devolution: Draft Scotland Bill published

The UK government has published draft legislation to deliver more powers, including tax powers, to the Scottish parliament.

“Further work” is required and the new Scotland Bill will not be presented to parliament until after the general election. The draft legislation is in line with the Smith Commission recommendations, but some of the tax measures – for example, those required to deal with pension tax relief and gift aid – will be dealt with in secondary legislation. Continue reading Tax devolution: Draft Scotland Bill published

Autumn statement: Tax competition in the UK and ‘jumping the gun’ on BEPS

This week’s autumn statement was more like a budget than this year’s budget, according to EY, with 59 policy measures listed in the full report compared to 56 in March.

We can now expect dozens of draft Finance Bill 2015 measures to be published on 10 December for consultation.

These will include the new “diverted profits tax”, which has had some commentators observing that the UK government may be jumping the gun as international efforts to reform the outdated corporate income tax system continue. Continue reading Autumn statement: Tax competition in the UK and ‘jumping the gun’ on BEPS