‘Good progress’ on new devolved taxes but costs run over by £1.2m

The spending watchdog said Revenue Scotland - which was set up to administer the new devolved taxes - had successfully delivered both the Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax.

The taxes were both devolved under the Scotland Act 2012.

However, Scotland’s most recent devolved taxes were implemented at a cost about a fifth more than planned, the auditor reported.

At £5.5million the bill came in at £1.2million more than originally estimated.

The increase was largely due to staff costs, after Revenue Scotland identified that extra staff were needed to provide the skills and support needed to deliver the programme within the time available.

A previous Audit Scotland report from December of last year had criticised Revenue Scotland over delays in recruiting staff and developing computer systems, and warned the collection system might not be fully functional in time.

However, the report said: “Revenue Scotland successfully managed to overcome delays in procuring a new IT system and appointing staff to ensure the technology and people needed to collect and administer the taxes were in place by the time the new powers went live on April 1 2015.”

Audit Scotland also said the introduction of the Scottish rate of income tax next April was on track.

Caroline Gardner, the Auditor General for Scotland, said: “Good project management involves recognising emerging risks and responding quickly to address them.

“Revenue Scotland effectively managed the risks highlighted in my previous report in December 2014 and successfully delivered the devolved taxes from April this year.”

The report also stated that the Scottish government and HMRC were working well together in preparing for the introduction of the Scottish rate of income tax in April 2016.

The Scottish government has also developed clear structures for overseeing the introduction of new financial powers, it said.

Some arrangements to manage the powers in the Scotland Act 2012 beyond next year are still being developed, which Audit Scotland said was a “reasonable approach” given that the Scottish and UK governments have yet to agree a new fiscal framework.

Ms Gardner added: “The future landscape of Scotland’s public finances is still being mapped out. Taken together, the powers in the Scotland Act and the proposals in the Scotland Bill 2015 have significant implications for the Scottish budget and the Scottish Parliament’s financial responsibilities.

“This increased responsibility inevitably brings new risks, so it’s essential that the Scottish government leads with an approach to financial reporting that’s comprehensive, transparent, reliable, timely, and supports enhanced parliamentary scrutiny.

“To achieve this, it should ensure it is in a position to move quickly to further develop this area, once key agreements are reached.”