Simplicity must be focus in new era of Scottish taxation, warns ACCA

As Scotland embarks upon a new era of devolved tax powers, the Association of Chartered Certified Accountants (ACCA) has warned that maintaining simplicity must be the main priority for Holyrood.

Chas Roy-Chowdhury, head of tax at ACCA, says the start of the financial year represents a new era for the Scottish Government developing a more direct relationship between taxation and the economy, with greater power over revenue and expenditure than ever before.

However, he warns that “the new powers also create further complexities, with those earning above £43,000 paying a higher tax rate than elsewhere in the UK”.

He said: “Combined with rising rates for many small businesses, many Scottish taxpayers will be experiencing more challenging circumstances just as Brexit negotiations get underway. Meanwhile, the potential for future divergences could harm the competitiveness of Scottish firms in terms of attracting top talent.

“Providing assurance that the Government will seek to keep the tax system as simple as possible will help alleviate some of these pressures.”

Mr Roy-Chowdhury further explained that the role of the Scottish Fiscal Commission will become greater in the years ahead: “As a result of public revenues now more closely linked to economic performance, Holyrood needs to maintain a cautious approach. With air passenger duty and a greater share of VAT revenue due in coming years, the Government will have to invest wisely in strategies which will grow the economy long-term whilst resisting the urge to further complicate the tax system.

“With the Scottish Fiscal Commission now in force as a statutory body, it needs to act as a strong voice in ensuring independent and accurate forecasts and reporting are available to policy-makers. They will also have a vital watching brief on the overall level of additional borrowing undertaken to fund new projects . In the interim, ACCA remains committed to working with the Scottish Government to provide the expert advice and counsel necessary to navigate a period of profound economic uncertainty.”