Draft Hybrid Rules Guidance in relation to State and Local Taxes - CIOT comments

6 Jul 2017

"Air Departure Tax (Scotland) Bill: The ADT Bill is now in the final stage of its consideration by the Scottish Parliament. Parliament approved the general principles of the Bill at Stage 1 on 25 April, and the Bill was amended at Stage 2 on 17 June. In summary, exemptions were added to the Bill and some minor tweaks were made to the collection and management (i.e. administration) of the tax. I attach for your information the latest version of the Bill, as amended at Stage 2.

The next and final stage of the Bill process is Stage 3, which is scheduled for w/c 19 June. This will see Parliament debating (in the Chamber, not at Committee) the Bill, considering any final amendments to the Bill lodged by either the Government or non-Government members, and taking a vote at the end of the debate on whether or not to approve the Bill (which we don‚ t expect). Assuming Parliament approves the Bill, Royal Assent could be received by the end of July.

Secondary legislation ‚ As has previously been communicated, tax rates and bands are not in the Bill and will be delivered instead in secondary legislation in the autumn. The Scottish Government is fully aware of the clear desire from stakeholders, in particular those in the aviation sector and travel operator companies, for clarity as soon as possible on what the tax rates and bands will be for 2018-19. This is something we are factoring into our plans.

Independent economic assessment ‚ The Scottish Government has commissioned an independent economic assessment of ADT, and has given a commitment to Parliament to publish this no later than when the secondary legislation plans for tax bands and tax rate amounts are laid before Parliament.The economic assessment report will also consider the best way to design a robust monitoring and evaluation framework so that this can be put in place for assessing the economic, socio-economic and environmental impacts of ADT in the future.

Following a competitive tendering process, the assessment is being carried out by Peter Brett Associates (PBA): https://www.peterbrett.com/.

PBA is keen to speak to stakeholders from a broad range of sectors (e.g. aviation, non-aviation transport, general business, environmental and tourism) to ensure that the assessment takes into account as broad a range of evidence as possible, where relevant to the scope of the assessment. If you are interested in speaking to PBA about the assessment, please contact Stephen Canning (Project Manager) in the first instance: email - scanning [at] peterbrett.com; telephone ‚ 0131 297 7012.

Highlands and Islands exemption ‚ The Scottish Government strongly supports retaining a like-for-like (compared to UK APD) Highlands and Islands passenger exemption under ADT and is interested in suggestions made by some stakeholders for enhancing the current exemption. You may be aware that, after careful consideration, the Scottish Government has determined that a Highlands and Islands exemption needs to be notified to and assessed by the European Commission under State Aid rules before it is implemented in compliance with European Union law. The Scottish Government is working closely with the UK Government to resolve this issue. The UK, as the EU Member State, is responsible for notifying the exemption to the Commission. We will ensure stakeholders are kept updated on this matter.

Environmental assessments ‚ As you may be aware, the Scottish Government is carrying out a Strategic Environmental Assessment of our plan to reduce the overall burden of ADT by 50% by the end of the current Parliament. Last year we carried out a public consultation on the Screening and Scoping stages of the assessment (the analysis report can be found here). The next step of the assessment is to publicly consult on both the policy plan (a 50% reduction in the overall ADT burden by the end of the current Scottish Parliamentary session) and an Environmental Report which outlines the findings of the assessment of the plan against a wide range of environmental topics such as climate factors, air quality, material assets and biodiversity.

The 12 week public consultation will launch sometime during the middle to the end of June, and the Government will at the same time also be publishing an updated greenhouse gas emissions assessment of the likely emissions impact from the overall 50% reduction plan. This will update the previous assessment carried out in 2014: https://www.transport.gov.scot/publication/estimate-of-the-impact-on-emissions-of-a-reduction-in-air-passenger-duty-in-scotland/j340458-01/.

I will circulate a link to both the consultation and the updated greenhouse gas emissions assessment when they are published.

The Scottish Government is also undertaking a noise assessment of the overall 50% reduction intention and this will be published in the autumn, no later than when the tax bands and tax rate amounts plans are announced.

Next stakeholder forum meeting ‚ For those who are members of the Scottish Government‚ s ADT stakeholder forum, we will be in touch with you in the next few weeks with a view to scheduling another forum meeting soon, which, as per previous meetings, is likely to be chaired by the Cabinet Secretary for Finance and the Constitution, Derek Mackay MSP."

Technical Team