MSPs passed a bill from the Scottish Government to set up Revenue Scotland – a new body that will collect two newly devolved taxes from April 2015 as part of a package of additional powers for the parliament.
Finance secretary John Swinney told MSPs the new laws would provide a “solid foundation” for the future devolution of taxes to Holyrood, as the bill was formally approved with cross-party support yesterday evening.
Revenue Scotland is being set up after the Scotland Act 2012 handed new tax powers to Holyrood.
These include the land and buildings transaction tax, which will replace stamp duty, and a new Scottish landfill tax. Both will go directly to the new body instead of HMRC.
Mr Swinney also claimed new avoidance rules would go further than the UK government approach to tax dodging.
He said transactions that “lack either economic or commercial substance” would be exposed by Revenue Scotland rules on transparency in the tax arrangements of firms.
The minister said there would be greater focus on detecting unusual financial practices in business.
Mr Swinney said: “It also sets out a number of examples which might indicate that an arrangement lacks economic or commercial substance, for example if it is carried out in a manner which would not normally be employed in reasonable business conduct.”
He added that “artificial tax-avoidance arrangements are unacceptable” as he told MSPs that the bill “takes the most robust possible approach to tax avoidance in relation to any devolved taxes”.
Other new measures mean that taxpayers will be able to challenge decisions taken by Revenue Scotland without having to “resort to expensive legal action”, Mr Swinney said.
Legal action would be replaced with the right to ask for an internal review and access to Scottish tax tribunals.
The SNP minister said the shake-up in tax regulations would strike a “fair balance between the taxpayer on the one hand and the tax authority on the other” and lead to increased confidence about the way Holyrood used its powers.
Mr Swinney added: “These arrangements are robust and credible and will provide Scottish taxpayers with confidence in the administration of devolved taxes.
“I believe that it provides a robust framework for the collection and management of the first two devolved taxes when they come into force on 1 April 2015, and also a solid foundation that we can build upon
in the event of this parliament becoming responsible for a wider range of taxes.”
Mr Swinney’s plans were backed by the main opposition parties in a Holyrood debate on the bill, with no MSPs opposing the law change.
Scottish Conservative finance spokesman Gavin Brown said the final debate on the bill had been “broadly consensual” but added that there was still more work to be carried out on the bill, which “must be done and completed before 1 April next year”.
Mr Brown added: “The first true test of Revenue Scotland’s performance will come in terms of the charter – Revenue Scotland has to create a charter of standards and values – bringing in reciprocity between Revenue Scotland and taxpayers”.
Scottish Labour finance spokesman Iain Gray said the tax changes were part of a “significant step forward in rebalancing the devolution settlement by securing new fiscal powers and decision-making for this parliament”.