Part 3 – Introduction and Administration of the Levy
Section 12 – Scheme to impose levy
29.This section allows a local authority to introduce a VL scheme or schemes for all or part of its area (subsection (1)(a)). It also allows a local authority to modify or revoke an existing VL scheme (subsection (1)(b) and (c)). It is open to a local authority to make different provision for different purposes or different areas within the local authority’s area (subsection (2)). As a result, a scheme may, for example, set different dates when the scheme is to come into force as regards different types of accommodation. This section should be read alongside section 14 which sets out the required content of any VL scheme introduced by a local authority.
30.Different local authorities may work together to introduce a joint VL scheme (subsection (3)), and in such a case, they must act jointly in relation to all aspects of the scheme (subsection (4)(a)). Subsection (4)(b) contains modifications of certain terms used within the Bill where a joint VL scheme is in place.
Section 13 – Prior consultation on scheme
31.This section sets out the steps which a local authority must take before introducing or modifying a VL scheme. The authority must first prepare and publicise an outline of the proposed scheme or the proposed changes to an existing scheme (referred to in subsection (1)(a)(i) as “the proposal”). The authority must also publicise a statement about the cases and circumstances in which the levy is not payable or may be reimbursed, the objectives of the proposal and an assessment of the impact of the proposal in the authority’s area (subsection (1)(a)(ii), (iii) and (iv)) (which must include the likely effects of the proposal on persons living within the scheme area and other persons likely to be affected - subsection (3)). The objectives of the scheme must relate to developing, supporting or sustaining facilities and services which are substantially for or used by persons visiting the local authority’s area for leisure or business purposes (or both) (subsection (2)). By way of example, the objectives of a particular scheme may include the building of a visitor centre, improvement of convention centres or other local spaces used for business meetings and conferences, and improvement of transport links to a location popular with visitors to the area.
32.The authority must then carry out a consultation exercise on the proposed scheme, with subsection (1)(b) requiring the authority to consult persons who are representative of communities, tourist organisations, businesses engaged in tourism, the National Park authority (if any part of the area covered by the proposed VL scheme has been designated as a National Park), and other persons likely to be affected. If the proposal is that the VL scheme is to be modified, the authority must also consult the visitor levy forum (“VL forum”) for that scheme set up under section 16(1) (subsection (1)(b)(ii)). Following the consultation, the local authority is required under this section to prepare and publicise a report summarising the consultation responses and confirming whether it plans to proceed with the proposal (subsection (1)(c)). See section 14(3) and (5) for the timing implications of the date of publishing a report under section 13(1)(c) stating that the authority intends to proceed.
33.A local authority must publicise in advance any proposed revocation of a VL scheme (subsection (4)).
Section 14 – Required content of a scheme
34.Section 14(1) sets out the elements which a local authority must include in a VL scheme, including the area in which the scheme will operate, the date the scheme is to come into force, the percentage rate of the levy (which is set by the local authority under section 6, and subject to any maximum percentage rate set by regulations under section 6(3)), the scheme’s objectives and arrangements for the review of decisions taken by the authority in relation to the scheme. The scheme must also specify when, during the period of the scheme, a purchase of the right to reside in or at overnight accommodation is to give rise to the levy. This might be the whole of the scheme period. Or it might be a different period or periods. For example, it might specify particular dates in a calendar year or seasonal periods (for example, the period ‘beginning with the first Monday in April and ending with St Andrew’s Day’). The scheme must also specify cases or circumstances where the levy (or a sum equivalent to the levy) is not payable or is to be reimbursed (subsection (1)(h)). While the cases or circumstances in which the levy is not payable or is to be reimbursed are broad and may generally be determined by the relevant authority, subsection (1)(i) imposes a compulsory exemption. Subsection (1)(i) requires the scheme to specify that the levy (or a sum equivalent to the levy) is not payable where the visitor or any other person utilising the right to reside in an overnight accommodation is in receipt of specified disability benefits, payments or allowances (subsection (1)(i)). The specified disability benefits, payments or allowances are:
The disability living allowance (see Social Security Contributions and Benefits Act 1992, section 71),
Disability assistance for working age people (see Social Security (Scotland) Act 2018, section 31),
The attendance allowance (see Social Security Contributions and Benefits Act 1992, section 64),
The pension age disability benefit for older people (see Social Security (Scotland) Act 2018, section 31),
The personal independence payment (see Welfare Reform Act 2012, Part 4).
35.In order to facilitate the application of the exemption or reimbursement for the specified disability benefits, payments, or allowances, the scheme must also set out arrangements for the administration of the exemptions or reimbursement, including the evidence required and how it may be demonstrated that the person receives the relevant benefit, payment or allowance (subsection (1)(j)). Subsection (2) requires that for the purposes of subsection (1)(h), the scheme must also specify whether one of the cases or circumstances in which the levy (or a sum equivalent to the levy) is not payable or may be reimbursed is that the accommodation business has an annual turnover below the VAT threshold (defined by reference to the amount specified in paragraph 1(1)(a) of schedule 1 of the Value Added Tax Act 1994). This is not a required case or circumstance where the levy (or a sum equivalent to the levy) is not payable or may be reimbursed, but it requires the authority to explicitly state whether businesses with annual turnover below the VAT threshold are captured.
36.The effect of subsection (3) is that a local authority may not bring a VL scheme into force or have a significant modification of a VL scheme take effect until at least 18 months after the date on which the local authority decides to introduce or significantly modify a scheme (i.e., 18 months after the date on which a local authority publicises a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal to introduce or modify a VL scheme). A “significant modification” is defined in subsection (4) as a modification which expands the scheme area, increases the percentage rate(s) of the levy, or removes any cases or circumstances in which the levy (or a sum equivalent to the levy) is not payable or is reimbursed. Any other modifications may come into force on a date specified after the local authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal (subsection (5)).
37.Subsection (6) contains a regulation making power allowing the Scottish Ministers to amend subsection (1) to add to the list of the mandatory elements of a VL scheme, or to remove or vary the list (except paragraph (e) – the percentage rate or rates set by the authority under section 6). The Scottish Ministers may also by regulations amend subsection (4) to add to, remove, or vary the types of modifications which are to be considered significant (subsection (7)). Before making regulations under this section, the Scottish Ministers must consult local authorities, such persons as they consider to be representative of communities, businesses engaged in tourism and tourist organisations, and such other persons as they consider appropriate (subsection (8)). Regulations under this section are subject to the affirmative procedure (subsection (9)).
Section 15 – Publicity for introduction of scheme
38.This section requires a local authority which has, following consultation, decided to introduce a scheme, to notify the Scottish Ministers of its decision (subsection (1)(a)). It must also publicise the decision and the date on which the scheme is to come into force (subsection (1)(b)).
39.This section also contains a regulation making power, subject to the negative procedure, allowing the Scottish Ministers to make further provision about the requirement on local authorities to publicise decisions to introduce a scheme and the coming into force date of the scheme (subsection (2)).
Section 16 – Visitor levy forum
40.This section provides for the establishment of a VL forum for each VL scheme. A local authority operating a VL scheme must within 6 months of its decision to introduce a VL scheme establish a forum (subsection (1)(a)). Subsection (2) contains the functions of the VL forum, which are to:
discuss and advise the authority and any other person or body consulting on matters to do with the VL scheme (subsection (2)(a)),
discuss and respond to consultation on modifications or the use of net proceeds of the VL scheme, under sections 13(1)(b) and 19(2) respectively (subsection (2)(b)),
discuss and make appropriate representations in relation to the reports required by sections 20 (annual report) and 21 (review of VL scheme) (subsection (2)(c)).
41.The local authority must maintain the forum for the duration of the VL scheme (subsection (1)(b)) and ensure that it is able to carry out its functions and that it meets on a regular basis (but at least twice per calendar year) (subsection (1)(c)).
42.The membership requirements of the VL forum are set out in subsections (3) to (5). Subsection (3) states that the VL forum is to be constituted of such persons as are appointed to it by the local authority operating the VL scheme. Under subsection (4), the local authority must ensure membership of the VL forum includes such persons it considers to be representative of communities, businesses engaged in tourism and tourist organisations in its area and that there is a reasonable balance of these groups. Local authority members may be appointed to the VL forum but must not form a majority of VL forum members (subsection (5)).
43.Where there is more than one VL scheme for different parts of the local authority area, more than one forum may be established but a single forum may also be sufficient (subsection (6)).
Section 17 – Transitional provision
44.This section confirms that the levy is not to be charged in respect of purchases of overnight accommodation paid for before the date on which the local authority decides to introduce a VL scheme (subsection (1)). The levy may, however, be charged in respect of purchases of overnight accommodation paid for between the date of the decision to introduce a scheme and the date on which the scheme comes into force, provided the date on which the person takes entry to the accommodation in respect of the purchase is after the coming into force of the scheme (subsection (2)). By way of example, if a local authority decides to introduce a scheme on 1 April 2025 and the scheme comes into force on 1 April 2027, bookings to stay in accommodation subject to the levy made between those dates will be subject to the levy if the date of the stay occurs after 1 April 2027.
Section 18 – Duty to keep separate account for scheme
45.Under this section, a local authority is required to keep a separate account for the VL scheme (subsection (1)) which must, for each financial year, be credited with the monies received under the scheme and debited with the expenses of operating the scheme (subsection (2)). This section also contains a regulation making power, subject to the negative procedure, allowing the Scottish Minsters to make provision in relation to the keeping of accounts by local authorities in connection with their functions under the Act (subsection (3)). The type of provision which can be made under this power includes specifying the form of accounts and making provision about the keeping of accounts where a joint VL scheme is in place (subsection (4)).
Section 19 – Use of net proceeds of the scheme
46.Section 19(1) requires a local authority operating a VL scheme to use the net proceeds of the scheme (defined in subsection (4) as the amount of money by which the gross amount received under the scheme exceeds the expenses of operating the scheme) for certain specified purposes. Those purposes are: facilitating the achievement of the scheme’s objectives (as set out by the local authority under section 13(1)(a)(iii)), and otherwise developing, supporting and sustaining facilities and services substantially for or used by persons visiting the local authority’s area for leisure or business purposes (or both) (or, in the case of a joint scheme, the area of another local authority which is part of a joint scheme – provided the authority is satisfied that using any share of the proceeds in this way will also benefit some part of its own area – see subsection (3)). By way of example, the objectives of a particular scheme may be to finance the building of a visitor centre, the improvement of convention centres or other spaces used for business meetings or conferences, or to improve transport links to a particular area. In line with subsection (1)(a), the net proceeds of the scheme would first have to be used to facilitate the achievement of those objectives. Surplus net proceeds would then have to be used in line with section 19(1)(b); they could therefore be used, for example, to build and maintain other business or leisure visitor facilities at another location in the local authority area frequented by visitors to that area.
47.In making use of net proceeds of a VL scheme, subsection (2) requires a local authority to have regard to its local tourism strategy (if it has one) and, if any part of the area to which the VL scheme relates has been designated as a National Park, the National Park Plan of that Park. Subsection (2) also requires a local authority to consult the VL forum for that scheme, persons who are representative of communities, businesses engaged in tourism and tourist organisations, and the National Park authority (if any part of the area covered by the proposed VL scheme has been designated as a National Park), as well as any other persons the authority considers appropriate.
Section 20 – Annual reporting on scheme
48.This section contains reporting requirements on local authorities operating a VL scheme. The first report must be published by a local authority within 18 months of the introduction of a scheme and annually thereafter (subsection (6)). Subsection (1) provides that reports must contain information about the amount of money collected under the scheme, how the net proceeds have been used, and the extent to which the scheme has met its objectives (as set out by the authority under section 13(1)(a)(iii)). A copy of a published report must be provided to the VL forum for that VL scheme (subsection (3)).
49.This section also contains a regulation making power, subject to the negative procedure, allowing the Scottish Ministers to make further provision about the content of reports required under this section (subsection (4)).
Section 21 – Review of scheme
50.Section 21 requires a local authority operating a VL scheme to review the scheme within 3 years of the scheme coming into force, and within each subsequent 3-year period (subsection (1)), and to publish a report following each review setting out its findings (subsection (2)). A copy of a published report must be provided to the VL forum for that VL scheme (subsection (3)).
Section 22 – Scottish Ministers’ power to regulate process
51.This section gives the Scottish Ministers power to make regulations about the process to be followed by local authorities when introducing, administering, reporting on or reviewing a VL scheme (subsection (1)). Regulations made under this section are subject to the affirmative procedure (subsection (2)).
Section 23 – Guidance on visitor levy scheme
52.Section 23(1) requires local authorities to have regard to any guidance issued under this section when exercising a function under Part 3 of the Act (which relates to introducing and administering a VL).
53.A corresponding duty is also created for VisitScotland to prepare and publish guidance about Part 3 of the Act, and to review the guidance from time to time and update the guidance if appropriate (subsection (2)). Subsection (3) sets out what the guidance must cover, including the persons who may be considered to be affected or appropriate for the purposes of consultation duties, the processes an authority might follow before determining the cases or circumstances in which the levy is not payable or to be reimbursed, support that may be provided to liable persons to operate in accordance with a VL scheme, and matters to be considered when setting the objectives of a VL scheme or deciding on the use of net proceeds of a VL scheme.
54.Before publishing new guidance or updated guidance, VisitScotland must provide the Scottish Ministers with a draft of the guidance for approval (subsection (4)). The Scottish Ministers may then approve the draft guidance, reject the draft guidance, or require the draft guidance to be modified (subsection (5)). Subsection (6) allows the Scottish Ministers to modify this section by regulations to either substitute a different body to be responsible for the duties in subsections (2) and (4) or to make more than one body responsible for the duties in subsections (2) and (4). For example, the Scottish Ministers may make themselves responsible for preparing and publishing guidance on the prior consultation requirements in section 13 and VisitScotland responsible for preparing and publishing guidance on the rest of the functions under Part 3. Subsection (7) makes it clear that if the Scottish Ministers are the body designated by regulations under subsection (6)(a) and (b), subsections (4) and (5) do not apply. Regulations may also add to, remove, or vary the list of what guidance must cover in subsection (3) (subsection (6)(c)). Regulations under subsection (6) are subject to the affirmative procedure.