Press release: Robust performance from Revenue Scotland but LBTT concerns remain

Tax professionals have welcomed another strong performance from the body charged with administering and collecting Scotland’s devolved taxes but cautioned that the numbers are likely to fuel further concerns over the Scottish Government’s flagship property tax.

The Chartered Institute of Taxation (CIOT) was responding to the publication today (26 September) of Revenue Scotland’s annual report for 2016/17.

Among the headline findings in the report were:

  • An increase in the total overall amount of tax collected from £572 million in 2015/16 to £633 million in 2016/17, with the total overall amount of tax collected since Revenue Scotland’s creation in 2015 passing the £1 billion mark
  • 98.8% of tax returns submitted online (98.1% in 2015/16), with more than 93% of tax payments made on time
  • An increase in compliance and enforcement activity generating additional tax revenue and penalties for non-compliance

However, the Institute noted that despite an increase in the total amount of revenue generated from Land and Buildings Transaction Tax (LBTT) between 2015/16 and 2016/17, the £484 million generated was £54.4 million less than the Scottish Government’s own forecasts for the amount of tax it hoped to generate, contained in its 2016/17 budget.

Meanwhile, receipts generated from Scottish Landfill Tax (SLfT) outperformed forecasts, generating £149 million - £16 million more than forecast.

The Institute noted almost across the board improvements in Revenue Scotland’s key performance indicators and noted that steps were being taken to address concerns relating to employee engagement and staff sickness/absence.

Commenting on the report, Moira Kelly, Chair of the CIOT Scotland Technical Committee, said:

“2016/17 has been another year of progress and achievement for Revenue Scotland as it gets to grips with Scotland’s devolved tax powers.

“There has been an almost across the board upturn in the organisation’s performance, with more tax collected, increased compliance and enforcement activity and more and more people submitting their returns online and on time.

“But while Revenue Scotland has overseen increases in the overall amount of LBTT and SLfT generated, it’s impossible not to note the discrepancies between the actual amount of LBTT generated and the amount that was initially forecasted by Scottish Ministers in the budget for 2016/17.

“Forecasting is – as we often hear – a very inexact science, but these figures are likely to fuel further concerns relating to the vulnerability of LBTT receipts and the potential impact that this may have on future Scottish budgets.”

Revenue Scotland will assume responsibility for administering Scotland’s new Air Departure Tax when it is introduced on 1 April 2018.