Law Society supports clamp down on tax avoidance
The Law Society of Scotland has today, 13 December, lent its support to a clamp down on tax avoidance in a new Scottish tax Bill.
The Revenue Scotland and Tax Powers Bill will provide for the establishment of Revenue Scotland as the tax authority responsible for collecting the two new devolved taxes (Land and Buildings Transaction Tax and Landfill Tax) and any other taxes which may be devolved or introduced in future.
The Bill also provides for the powers and duties of Revenue Scotland, including duties to provide information and guidance to taxpayers, and the rights and duties of taxpayers, including opportunities to resolve tax disputes quickly and efficiently. The Bill also proposes a Scottish General Anti-Avoidance Rule (GAAR) which will allow Revenue Scotland to counteract tax avoidance arrangements which are artificial. The proposed Scottish GAAR will thus be wider than the UK GAAR, which targets abusive arrangements.
The Law Society of Scotland has praised the Bill for containing a number of positive features, such as a separate Scottish tax tribunal and fully supports the Scottish Government's determination to promote a culture of compliance. However, the Society has recommended that the Bill increases taxpayer protections, for example, by providing for a General Anti-Avoidance Rule (GAAR) advisory panel.
Isobel d'Inverno, Convener of the Law Society's Tax Law Committee, said:
"Society depends on everyone paying the tax they owe. Tax avoidance undermines that principle. This Bill will help to ensure that government can afford the public services that we all use.
"We agree with the Scottish Government that the principles of an effective tax system are simplicity, neutrality, stability and flexibility. Whether this Bill will achieve all of these characteristics remains to be seen, but it certainly contains a number of positive features, including the establishment of Revenue Scotland as non-ministerial departmental body and the founding of a separate Scottish tax tribunal.
"We have supported the approach of simpler legislation combined with a General Anti-Avoidance Rule (GAAR), particularly in relation to Land and Buildings Transaction Tax, to ensure that tax revenues are not lost through avoidance.
"We are concerned, however, that in pursuing the laudable aim of reducing tax avoidance, the Scottish Government may not have included sufficient taxpayer protections in relation to the proposed Scottish GAAR. Whether the Scottish GAAR should be applied in any particular case will not always be straightforward. We believe there could be merit in providing for a panel to allow for an independent review as to whether a particular transaction should be counteracted by the GAAR.
"We think that the Bill provides an excellent opportunity to establish Scotland's tax system as an example of a modern and efficient tax system. We look forward to engaging with the Scottish Government throughout the passage of the legislation."
ENDS 13 DECEMBER 2013
Notes to editors
The Revenue Scotland and Tax Powers Bill is the third of three related Bills being brought forward by the Scottish Government as a consequence of measures enacted in the Scotland Act 2012.
The Law Society's Tax Law Committee responded to the Scottish Government's consultation on the Bill in April 2013, expressing support for the proposal that a framework should be established that could be applied not just to the current devolved taxes but to all future ones. The consultation response can be viewed here.
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13 December 2013