Analysis: Make decision on separate tax system quickly

The measures are not expected to come into force until 2015, but in truth this doesn’t leave a lot of time to plan and implement such complex powers.

Implementation remains a key issue – Scotland does not currently have any central tax administration equivalent to HM Revenue & Customs.

This is a pivotal issue to some tax aspects of the Bill. Employers and pension providers across the UK, not just in Scotland, would need to plan ahead for any changes in tax rates following the introduction of a Scottish rate of income tax, while at the same time grasping the intricacies of identifying which of their employees or customers is Scottish taxpayer.

These may sound simple enough questions, but they would be complex to answer.

Uncertainty about the enactment or implementation of the Scotland Bill affects their ability to make the necessary systems changes, so it is vital that the impact on employers and pension providers is considered while politicians debate Scotland’s relationship with the rest of the UK.

One issue that pension providers need to know, and soon, is whether they should invest in new IT systems to ensure their software and business operations will be ready for any introduction of a Scottish rate of tax. They need to know whether and how to identify basic rate tax reclaims.

But they don’t want to have to go through the investment in new systems or system changes if they aren’t going to be used. While there is a group looking at these issues at present, I think all would like to see certainty and cost-effectiveness on the agenda at Holyrood.

Issues also remain with the definition of a “Scottish taxpayer”. Deliberations are continuing in the House of Lords, which may bring some sense to the problem.

Another issue is the power to devolve stamp duty land tax, which has just seen some major changes in rates and structures introduced by Westminster.

Holyrood has a range of options available, but if it is to go ahead with tax system design and operation, it will need to move quickly to address the principles, purpose and administration. It also needs to build capacity and awareness among civil servants and MSPs.

The Scottish Government needs to provide a timeline and direction on the way forward.

With an independence referendum promised by the Scottish Government in the second half of this Holyrood Parliament – placing it some time after January 2014 and before campaigning for May 2016 begins – the Scotland Bill could be overtaken by events.

Arguments for and against Scottish independence and over the definitions of “devolution max” and “independence lite” are likely to dominate political debate about Scotland’s future.

• Elspeth Orcharton is assistant tax director at the Institute of Chartered Accountants of Scotland