It just doesn’t add up for the new Scottish taxman
Delay could see staff use ‘paper based system’
THOUSANDS of tax returns may have to be written by hand amid fears an IT system will not be ready in time for major new powers coming to Holyrood.
With up to 600 returns set to be handled every single day, there are fears of catastrophic delays to house deals when a new land and property tax is introduced.
Britain’s historic stamp duty system will be broken up on April 1, under plans approved by MPs in early 2012.
But auditors revealed earlier this month that government officials have underestimated the challenge of creating a new Scottish tax authority, with costs soaring and an ‘increased risk’ the online system may not be ready.
Yesterday, a Revenue Scotland boss disclosed that contingency plans are in place for solicitors to use a ‘paper-based system’. Although there is no suggestion the IT
‘Back to the dark ages’
system will not be ready by 2016, if further problems emerge there could be chaos in April of that year when income tax is also partially devolved.
Finance Secretary John Swinney previously insisted a Scottish tax authority would cost 25 per cent less than processing the taxes through HM Revenue and Customs, but the latest estimates put the figure closer to 5 per cent less. Revenue Scotland head of revenue Eleanor Emberson admitted her estimates ‘were not found out to be as accurate as I would have wished’.
Appearing before Holyrood’s public audit committee yesterday, she asked MSPs to believe her assurance that the system will be ready for April 1, and challenged public spending watchdog Audit Scotland’s perception that this timescale is at risk.
But she confirmed there is a ‘contingency plan’ for ‘everyone who is submitting a land and buildings transaction tax to submit paper’.
She added: ‘ We are expecting somewhere between 450 and 600 tax returns per working day on average during the year, but it will vary.
‘We’re planning to go live with the possibility that it might be significantly higher, so that we are ready for any possible spike on April 1, and we think there could be up to 800 on the first day due to a combination of factors due to the taxes and the help to buy scheme.
‘We absolutely have to have a means of collecting the tax and processing the tax returns from April 1. If it had to be a paper-based system for a period of time we could certainly make that work and still deliver a good service and make sure that there is money coming in the door, but that’s not what we are planning.’
However, Lib Dem MSP Tavish Scott said: ‘Revenue Scotland seem relaxed about the prospect of taking Scotland’s tax system back to the dark ages of pen and paper but no one else will be. The knockon effect of any problem with IT systems could be lengthy delays.’
From April, a new Land and Buildings Transaction Tax in Scotland will replace the UK system of stamp duty under plans for further devolution agreed long before the independence referendum.
From April 2016, Mr Swinney will then also have control of a 10p share of income tax.
Auditor General Caroline Gardner was yesterday quizzed by MSPs about the watchdog’s recent report, which identified a series of risks ahead of the power grab. She told them: ‘There is an increased risk that the system may not be fully in place as planned come April 1, but I am certainly not saying that the government and Revenue Scotland won’t be in a position to collect that taxes at that point.’
Conservative MSP Mary Scanlon said: ‘The Finance Secretary said the operational costs to the Scottish Government will be “at least 25 per cent lower than if I had asked HMRC to deliver the status quo”. The costs have now risen from £16.7million to £21million, so instead of 25 per cent less it’s about a million less than the £22million from HMRC.’
Labour MSP Michael McMahon added: ‘[Eleanor Emberson] seems to be in denial about the staffing and IT issues, simply saying she doesn’t agree with the Auditor General. That’s remarkable complacency.
‘What’s worse is she admitted that over the past two years she’s had no meetings with Scottish ministers to di s c uss t hese problems.
‘Presumably, John Swinney and colleagues were too busy trying to break up Britain to bother about the details of setting up a new tax system to help pay for the powers they already have.’