Scottish businesses to suffer with tax changes warns ACCA
The news that Scotland plans to scrap council tax and replace it with a local income tax must be met with caution warns ACCA (the Association of Chartered Certified Accountants) Scotland.
Andrew Leck, head of ACCA Scotland says: “The concerns highlighted in the many responses to the Scottish Government’s consultation in the summer, still need to be addressed before we can have confidence that this will be a fair tax that will benefit Scotland”
“ACCA Scotland believes that the proposal will place significant burdens on employers and may not raise the revenue currently raised by the Council Tax.”
The following are ACCA Scotland’s main concerns with the removal of the council tax:
1. A significant funding gap is likely
Implementation costs, a potential shortfall in funds raised, uncertainty over the current council tax rebate and difficulties with collection could all result in a significant funding gap.
2. Collection bottlenecks are likely
It is difficult to envisage how the collection processes can be made to work. The suggestion that HMRC be used fails to recognise the difficulty they will face if all taxpayers are required to self assess all income. This cannot have a favourable impact on fairness perceptions of a new local tax in Scotland.
3. Lack of robustness of the key collection criteria
Residency identification, manipulation, lack of certainty and, ultimately, fairness are issues that many of ACCA Scotland’s members have raised. Unless it is carefully managed, residency identification issues are likely to create an environment where, for some, the tax becomes voluntary.
4. ‘Red tape’ will hinder business
The Government seems to be proposing a much higher burden of proof and more onerous record-keeping requirements for businesses and individuals. The overall impact of the increase in red tape will adversely affect the ‘entrepreneurial spirit’ within all sizes and types of business.
5. Migration of the mobile workforce
ACCA Scotland members are concerned that the risks of migration as well as its impact on the demographic profile of Scotland, and its effect on the economy have not been adequately considered.
6. Complexity and uncertainty will result in a low level of compliance
The proposed option increases complexity and fails to provide the certainty required by tax payers. Where trust in the tax system decreases, levels of compliance may fall, with the tax effectively becoming voluntary.
- Ends -
Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 325,606 students and 122,426 members in 170 countries worldwide.
2. ACCA believes that globalisation of business requires one set of reporting standards. We favour principles-based, not rules-based standards, which is why we support the worldwide implementation of IFRS.
3. ACCA believes that tax systems should be transparent, simplified, fair and certain.
4. Complying with regulations affects SMEs disproportionately, which is why ACCA urges governments and standard setters to ‘think small first'’.
5. ACCA’s recent discussion paper ‘Perspectives on fair tax’ http://www.accaglobal.com/pdfs/technical/tech-tp-ft.pdf highlights the dilemmas the government faces. The discussion paper highlights three issues which are important to taxpayers and which the Government needs to consider: Simplicity; Transparency and Burden.
For further information please contact:
Andrew Leck, ACCA Scotland phone: +44 (0)131 247 7511/07912395672 e mail: andrew.leck@uk.accaglobal.com