Tax avoidance ‘could be made easier’ by new Scottish tax powers

Tax avoidance 'could be made easier' by new Scottish tax...Tax avoidance could become much harder to curb if the Scottish government is given more fiscal power, due to the systemic complexities that would arise, experts have warned.

Addressing the Treasury Committee on the issue, accountants said giving Holyrood more power over areas like income, inheritance and corporation tax would create a number of risks. For example, it would be difficult to establish whether assets were kept in Scotland or the rest of the UK for inheritance tax purposes.

Head of tax at the Association of Chartered Certified Accountants Chas Roy-Chowdhury remarked: “To the extent that there is going to be devolution with a change in the tax itself, then that could create uncertainty or complexity, and avoidance.”

The issue of how much tax-raising power the Scottish government should have is a hotly contested topic. The three main UK political parties jointly pledged ahead of the independence referendum last month that there would be more powers for Holyrood, but they are not agreed on exactly what the ‘devo max’ package should consist of.

As a result, the Smith Commission is seeking to devise an acceptable plan and has asked for submissions from interested parties. The Conservatives are keen to see more tax-raising powers as it would place more responsibility for budgets and spending on ministers in Edinburgh, while the Scottish National Party wants to see full fiscal autonomy, having come closer than many imagined to realising its goal of securing a vote in favour of independence.

Holyrood does already have some tax-varying powers to raise or lower income tax by three per cent from the national level. This was granted when the Scottish Parliament was established in 1998, but these have never been used.

The referendum last month saw 55.3 per cent vote against independence and 44.7 per cent for it. Only four of Scotland’s 32 local government districts recorded votes in favour of independence, but these included Glasgow, the fourth largest city in Britain.

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