Public Audit Committee calls for greater transparency on Scottish income tax collection


Greater transparency is needed if Holyrood is to be able to scrutinise HM Revenue and Customs’ (HMRC) collection of the new Scottish Rate of Income Tax, says a parliamentary committee.

In a report published today, the Public Audit Committee sets out for the first time what audit information the Scottish Parliament can expect, and what further data is required if Holyrood is to have proper oversight and scrutiny of £4.5 billion worth of income tax collected by HMRC from Scottish tax payers.   

While HMRC and the National Audit Office’s co-operation to date has been welcomed, the Committee has identified specific ‘performance’ data it says should also be provided to the Scottish Parliament - data that would include details of tax write-off, fraud and error levels as well as measures of how well Scottish tax payers are served by HMRC. 

Public Audit Committee convener Hugh Henry MSP said

“A key concern of the committee throughout this inquiry has been ensuring that the Scottish Parliament receives sufficient, meaningful data to be able to scrutinise the performance of HMRC in collecting SRIT income, as clearly, the amount of tax HMRC collects directly affects how much money Scotland receives. 

“This committee recognises that the Parliament's ability to hold HMRC to account for its performance in accurately collecting the SRIT is vitally important in ensuring Scotland receives its fair allocation of income tax.”

In its report, the committee recommends that HMRC provide to Holyrood the following performance information alongside the SRIT extract from its annual accounts:

  • an assessment of underpayment as a result of fraud and error in respect of Scottish taxpayers based in Scotland;
  • performance in relation to tax and NICs debts (roll rate) owed by Scottish tax payers who complete Self-Assessment tax returns;
  • an estimate of the amount of Scottish income tax written off:
  • the complaints it receives regarding the SRIT.

The committee has also recommended that Audit Scotland should provide additional assurance on the National Audit Office’s audit of HMRC’s performance in collecting and administering the SRIT.

Elsewhere in the report, the committee recommends that the Scottish Government publishes its data on Scottish migration patterns as this will assist the Parliament to consider the impact of differing levels of SRIT - whether setting a different rate of SRIT would either encourage or discourage people to declare themselves as Scottish tax payers.

The Scottish Government has two months in which to respond to the committee’s report.  HMRC, the National Audit Office and Audit Scotland will also be asked to respond to relevant recommendations in the report.


Under the Scotland Act 2012, the basic, higher and additional rates of income tax levied by the UK Government would be reduced by 10 pence in the pound for those defined as Scottish tax payers. The Parliament would then determine and set one single rate of income tax (SRIT) across all tax bands. The rest of the income tax structure remains a reserved matter and will continue to be determined by the UK Parliament. As a result the SRIT is not a devolved tax but rather a tax rate set by the Parliament which will replace part of the UK income tax.

The Scottish Government will need to propose a new SRIT every year, with a resolution passed by the Scottish Parliament in such time as to allow the taxes to be collected at the start of each tax year (starting in April 2016 and from April each year thereafter).

In evidence the Public Audit committee heard that there are approximately 40 million individual taxpayers in the UK and approximately 2.6 million in Scotland.  In monetary terms, estimated UK income tax receipts total approximately £152 billion with about £4.5 billion arising from Scottish tax payers.

The cost to HMRC of implementing and operating the SRIT has been estimated as £40-£45 million for implementation with £4.2 million of annual running costs thereafter. These costs will be met by the Scottish Government and will therefore also be subject to audit by Audit Scotland. The National Audit Office will also lay in the Scottish Parliament an annual report on key aspects of HMRC’s administration and collection of the SRIT.

The full report ‘Framework for Auditing the Scottish Rate of Income Tax’ is available on the committee’s web pages:

Public Audit Committee


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