SNP demands inquiry into police force's '¨lost millions in VAT

Police Scotland and Scottish fire services are the only ones who don't have a VAT exemption. Picture: John Devlin

The SNP have asked an influential Westminster’s committees to investigate tax rules that have cost Scottish emergency services tens of millions of pounds in VAT.

Police Scotland and the Scottish Fire and Rescue Service are the only local blue-light services unable to recover their VAT bill. SNP MP Martin Docherty-Hughes called the charges “inexcusable”.

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Police Scotland faces a funding gap of up to £85 million as it struggles to meet tough savings targets, and despite a Scottish Government pledge to protect its budget.

The former Chief Constable of Police Scotland, Sir Stephen House, called the lack of a VAT exemption for the force “bewildering”.

Services paid for by local taxation are able to apply to HMRC for a rebate on VAT payments, but Scottish emergency services lost that exemption when they were merged in 2013.

Police Scotland has paid £76.5m in unrecoverable VAT since it was formed three years ago, while the fire service has paid roughly £10m each year.

Mr Docherty-Hughes has written to Yvette Cooper, the newly-elected chair of the Commons home affairs select committee, asking her to hold a hearing on the cost of VAT to emergency services.

Mr Docherty-Hughes said: “The Tory government’s inexcusable policy of charging Scotland’s police, fire and rescue services tens of millions in unrecoverable VAT every year is taking vital funding away from the front line emergency services that people across Scotland depend on.

“There is no legitimate reason for taking this funding away from Scotland’s 999 services. We know that the UK government has the ability to exempt Scottish emergency services from VAT if only they choose to do so.”

The Scottish Conservatives accused the SNP of “playing petty political games” over the issue. A request for an exemption for the Scottish police and fire services was refused by the UK government before the mergers took place.

A spokesman for the Scottish Conservatives said: “This is another example of the SNP playing petty political games.

“It was well warned about the situation with VAT in relation to creating a single force, but pressed ahead anyway. Now it’s looking for others to blame in attempt to spare its own blushes.”

A decision on whether to hold a one-day inquiry is expected at the committee’s next meeting in a week’s time.