Commentary on Provisions

Part 1 – Scottish Aggregates Tax

Chapter 4 – Administration
Registration
Section 17: Scottish aggregates tax register

61.Subsection (1) of this section places a duty on Revenue Scotland to maintain a register containing whatever information it deems required for the purposes of the collection and management of Scottish aggregates tax. Subsections (2) to (6) set out the content of the register and make further provision on Revenue Scotland’s powers concerning the register, including giving authorisation to Revenue Scotland to publish information in the register despite any prohibition within devolved competence that might otherwise apply.

Section 18: Duty to register for tax

62.Subsection (1) of this section imposes a duty to register for Scottish aggregates tax on a person who carries out a taxable activity: this is defined in subsection (2) as being responsible for subjecting a quantity of aggregate to commercial exploitation (see sections 7 and 8 of the Act).

63.Subsection (3) imposes a duty on a person who has not yet registered for tax to notify Revenue Scotland of their intention to carry out taxable activities, at either the point of carrying them out or, if earlier, the point of forming the intention to do so.

64.Subsection (4) deals with the time of registration by Revenue Scotland, fixing it to the point at which a person carries out taxable activities: where a person is liable to be registered by virtue of subsection (1), Revenue Scotland may register the person with effect from that time.

65.Subsection (5) gives a regulation-making power to the Scottish Ministers to grant exemptions from registration and related requirements. Such regulations will be subject to the affirmative procedure.

66.Subsection (6) makes further provision on what regulations under subsection (5) may contain, including for equivalent provision to section 74 of the 2014 Act (on record-keeping duties) to apply to persons who are exempt from registration.

67.Subsection (7) defines a registrable person for the purposes of Part 1 of the Act.

68.Subsection (8) clarifies the position on registration for groups of bodies corporate (see section 29 of the Act).

Section 19: Cancellation of registration for tax

69.Subsection (1) of this section imposes a duty on a taxpayer to notify Revenue Scotland if they cease to have the intention of carrying out taxable activities.

70.Subsection (3) empowers Revenue Scotland to cancel a person’s registration where it is satisfied that a person has ceased to carry out taxable activities, with effect from the earliest practicable time afterwards.

71.Subsection (4) deals with the cancellation of registration after notification under subsection (1), providing that Revenue Scotland has a duty to cancel registration if satisfied that no tax is due from, or credit is due to, the person who carried out the notification.

72.Subsection (5) deals with the situation where a person has never carried out taxable activities and Revenue Scotland is satisfied that it never will do, providing that Revenue Scotland has a duty to cancel their registration in such circumstances.

73.Subsections (6) and (7) make provision on how Revenue Scotland is to cancel registration where a registered person becomes exempted from the requirement to be registered by virtue of regulations under section 18(5).

Section 20: Duty to notify Revenue Scotland of production of exempt aggregate

74.This section places a duty on a person who is not registered for Scottish aggregates tax and is subject to an exemption under section 18(5) – i.e. because they carry out the production of exempt aggregate – to notify Revenue Scotland of that fact in accordance with regulations. The circumstances for notification are to be set out in regulations.

Section 21: Registration by Revenue Scotland

75.This section concerns compulsory registration by Revenue Scotland. Where it appears to Revenue Scotland that a person is operating or using any premises, or intends to do so, for the purposes listed in subsection (2) relating to the production of aggregate, and has not already registered (perhaps due to an erroneous belief that they don’t need to do so), Revenue Scotland is empowered to register those premises against that person’s name in the Scottish aggregates tax register.

76.Subsection (3) provides that the particulars included in the register for premises subject to compulsory registration under subsection (1) must set out the boundaries of the site in a way best designed to prevent the avoidance of tax.

77.Subsection (4) provides that any question as to the boundaries of originating sites for the purposes of this Part of the Act are to be determined conclusively in accordance with the register.

Section 22: Registration: further provision

78.This section gives a regulation-making power to the Scottish Ministers to make further provision on registration for Scottish aggregates tax in the terms listed, including the specification of times for the making of notifications to do with registration in sections 18 to 20, and the form and content these notifications are required to take. Regulations under this section will be subject to the negative procedure.

Tax returns and record-keeping
Section 23: Duty to make returns and pay tax

79.This section gives a regulation-making power to the Scottish Ministers to provide that a registrable person must account for the payment of Scottish aggregates tax by reference to specific accounting periods; must make returns in relation to those periods; and must pay tax by the deadlines and in the manner set out in the regulations. Such regulations will be subject to the negative procedure and may make the further provision listed in subsection (2): including provision for tax to be treated, in particular circumstances, as due for a different period to the period it would ordinarily be accounted for; provision for the correction of errors in returns; provision for the relaxation of particular requirements; and provision for the calculation of interest.

Section 24: Form and content of returns

80.This section provides that tax returns for Scottish aggregates tax must meet Revenue Scotland’s specifications in terms of their content and form.

Section 25: Communications from taxpayers to Revenue Scotland

81.This section provides that notices, applications or other communications that taxpayers make to Revenue Scotland must meet Revenue Scotland’s specifications in terms of their content and form.

Non-resident taxpayers
Section 26: Appointment of tax representatives

82.This section of the Act gives a regulation-making power to the Scottish Ministers to make provision in order to ensure, where a taxpayer is not resident in the UK, that they arrange for the appointment of a person resident in the UK to act as their representative for the purposes of paying Scottish aggregates tax. Subsection (2) defines a “non-resident taxpayer” as a person who is not resident in the UK and who is registered, or is required to be, for the purposes of the tax (or would be required but for an exemption in regulations made under section 18(5) of the Act). The regulations will be subject to the negative procedure.

83.The regulations may make (but are not limited to) the kinds of provision listed in subsection (3): including a requirement for initial notification by taxpayers of a change in residence status to Revenue Scotland; a requirement for approval by Revenue Scotland of an appointment of a tax representative; and the creation of a process for requesting such approval. Failure to request approval may be penalised by virtue of section 216C of the 2014 Act, as inserted by section 45 of this Act.

Section 27: Effect of appointment of tax representatives

84.This section provides for the effect of the appointment of a tax representative by a taxpayer: they are entitled to act on a non-resident taxpayer’s behalf and must make sure that the taxpayer complies with their legal obligations under the Act in relation to Scottish aggregates tax.

85.In addition, subsection (3) of this section makes a tax representative personally liable in respect of any failure of compliance by the non-resident taxpayer with the requirements of this Act, and imposes joint and several liability on the tax representative and the non-resident taxpayer in respect of any such failure (meaning that each person would be responsible for the full liability for the failure).

86.Subsection (4) clarifies that a tax representative does not themselves have to register for Scottish aggregates tax.

87.Subsection (5) provides that a non-resident taxpayer will themselves be liable in respect of any tax due as a consequence of fraud or error by their tax representative.

Section 28: Definition of “business premises” to exclude premises of tax representatives

88.This section of the Act amends section 141 of the 2014 Act to apply a new definition of “business premises” for the purposes of Scottish aggregates tax.

89.Generally this means premises that a designated officer of Revenue Scotland has reason to believe are used in connection with the carrying on of a business by or on behalf of a person. But in relation to Scottish aggregates tax, it does not include the premises of any tax representative within the meaning of this Act (i.e. the person who in accordance with regulations under section 26 acts as a taxpayer’s representative for the purposes of Scottish aggregates tax).

90.Section 141(3B) of the 2014 Act clarifies that tax representatives may still be specified in regulations by the Scottish Ministers under section 142 of the 2014 Act as “involved third parties” whose business premises may be entered and inspected by designated officers of Revenue Scotland.

Special cases
Section 29: Groups of companies

91.This section provides for how groups of companies and members of groups are to be treated with regard to tax liabilities. This includes providing how groups of companies are liable through their representative member carrying out taxable activities (see section 18) and how corporate bodies can be considered a group.

92.Subsections (2) to (3) set out the conditions of the application for group treatment. An application for group treatment is made to Revenue Scotland under subsection (4) setting out which of the bodies corporate is to be the representative member. As per subsection (6) a successful application will take effect from the beginning of a particular accounting period. An application to vary or end the group treatment may be made under subsection (7) and, as per subsection (8), may be granted with effect from a time specified by Revenue Scotland in a written notice to the members of the group.

93.Subsection (9) provides that Revenue Scotland only has discretion to refuse an application under subsection (4) or subsection (7) if it appears necessary to do so for the protection of the revenue (i.e. to prevent the loss of tax revenue) – otherwise the application must be granted. However Revenue Scotland has no discretion at all to refuse an application under subsection (7)(b) to exclude a body corporate from group treatments.

94.Subsection (10) states that an application under this section must be made by the bodies or person controlling them and that the application should be made 90 days before the group status is to take effect.

95.Subsection (11) sets out the circumstances in which a corporate body or individuals will be deemed to control another corporate body, mainly if the corporate body is the latter body’s holding company within the meaning of section 1159 and Schedule 6 of the Companies Act 2006 or, in the case of individuals, would be were the individuals a company.

Section 30: Notification of cessation of eligibility for group treatment or of having place of business in UK

96.This section provides that where bodies corporate are treated as members of a group for the purposes of Scottish aggregates tax, and one of them becomes no longer eligible for group treatment under section 29, that body is under a duty to notify Revenue Scotland immediately of that fact. In addition, this section places a duty on representative members of groups to notify Revenue Scotland before ceasing to have an established place of business in the UK.

Section 31: Group treatment: change to application or notification

97.This section applies where bodies corporate are treated as members of a group for the purposes of Scottish aggregates tax. A body corporate which has made an application under section 29(4) or (7) relating to group treatment, or a notification under section 30(1) or (2) concerning the cessation of its eligibility for group treatment or of its having a place of business in the UK, has a duty to notify Revenue Scotland immediately if any information contained in or provided in connection with that application or notification subsequently becomes inaccurate.

Section 32: Group treatment: substitution and termination

98.This section deals with the scenario where the representative member of a group of bodies corporate ceases to be treated as a member of the group, and no application to change the representative member under section 29(7)(c) has been granted by Revenue Scotland. In such a situation Revenue Scotland is required to substitute a different member of the group as the new representative member by notice to that member.

99.Subsection (3) provides that where a body corporate which is a member of a group ceases to be controlled by any person (see section 29(11)) for the meaning of control in this context) then Revenue Scotland must terminate the group treatment of that body by notice.

100.In addition, subsection (4) provides that if it appears to Revenue Scotland necessary to do so for the protection of the revenue, it has a general power to terminate the group treatment of a body corporate by notice. The time termination comes into effect must not be before the day on which notice is given to the representative member, as per subsection (5).

Section 33:  Partnerships and unincorporated bodies etc.

101.This section of the Act gives a regulation-making power to the Scottish Ministers to make provision applying Part 1 of the Act to cases where a business is carried on in partnership or by an unincorporated body. Regulations under this section will be subject to the negative procedure. Under subsection (2), registration for tax can be in the name of the firm or body concerned (as opposed to being in the name of its members). A body corporate may have several divisions which are themselves bodies corporate: under subsection (4), Revenue Scotland may determine what divisions of a particular corporate body are registrable for Scottish aggregates tax.

Section 34: Bankruptcy etc.

102.This section of the Act gives a regulation-making power to the Scottish Ministers to make provision requiring persons who are carrying on the business of someone who has died, become bankrupt or become incapacitated – or whose business is in liquidation, receivership or administration – to inform Revenue Scotland that they are doing so. The regulations may also make provision allowing such persons to be treated as the original taxpayer for the purposes of Scottish aggregates tax; and make provision applying Part 1 of the Act to such persons. These regulations will be subject to the negative procedure.

Section 35: Transfer of business as a going concern

103.This section of the Act gives a regulation-making power to the Scottish Ministers to make provision applying Part 1 of the Act to cases where a business is transferred to another person as a going concern (that is, it is assumed that the business is still able to meet its financial obligations when they become due). The regulations may include provision requiring notification to Revenue Scotland, and provision treating the transferee as the original taxpayer for the purposes of Scottish aggregates tax. These regulations will be subject to the negative procedure.

Provision of security
Section 36: Security required by individual direction

104.Sections 36 and 37 of the Act empower Revenue Scotland to issue directions requiring taxpayers (and, in some circumstances, tax representatives) to provide security for the payment of any tax that may become due. Revenue Scotland has the power to specify what type of security is appropriate, but it is expected that a written guarantee from a financial institution (such as a bank) will normally be acceptable.

105.A direction under section 36 made by Revenue Scotland applies to an individual taxpayer or tax representative. A direction under this section may require a taxpayer or tax representative to provide security, or identify the amount of security that a taxpayer would be required to provide to secure the approval of the appointment of a tax representative. In respect of any particular taxpayer, an individual direction under section 36 prevails over a general direction under section 37.

Section 37: Security required by general direction

106.A direction under section 37 of the Act made by Revenue Scotland applies to taxpayers generally. It may specify the amount of security, or a method for calculating the amount of security, that persons are required to provide to secure the approval of the appointment of an administrative tax representative. It is expected that a written guarantee from a financial institution (such as a bank) will normally be acceptable. In respect of any particular taxpayer, an individual direction under section 36 prevails over a general direction under section 37.

Delegation of functions
Section 38: Delegation of functions by Revenue Scotland

107.This section amends section 4 of the 2014 Act, allowing Revenue Scotland to delegate its functions relating to Scottish aggregates tax to a person specified in regulations by the Scottish Ministers (subject to the affirmative procedure). A delegation of this kind does not affect Revenue Scotland’s ability to exercise that function or its legal responsibility for it, however (section 4(7)).

108.Under section 4(2), Revenue Scotland may give directions to the relevant person as to how a delegated function is to be exercised and the relevant person has a duty to comply with any such direction by Revenue Scotland. Section 4(2) provides that delegations or directions given under section 4 may be varied or revoked at any time.

109.Under section 4(4)-(5), Revenue Scotland has duties to publish information about delegations and directions given under this section, and to lay before the Scottish Parliament a copy of the information it publishes. However these duties do not apply to the extent that Revenue Scotland considers that publication of the information would prejudice the effective exercise of its functions, as section 4(6).