Part 3Introduction and administration of the levy

Process

12Scheme to impose levy

(1)

A local authority may—

(a)

introduce a scheme or schemes to impose the levy for all or part of its area (referred to in this Act as a “VL scheme”),

(b)

modify a VL scheme, or

(c)

revoke a VL scheme.

(2)

A VL scheme may make different provision for different purposes or different areas within the local authority's area.

F1(2A)

But a VL scheme, or two or more VL schemes taken together, may impose only one levy in respect of a purchase of the right to reside in or at a particular room or area comprising overnight accommodation on a particular night.

(3)

Two or more local authorities may act jointly to make a VL scheme.

(4)

In those circumstances—

(a)

they must continue to act jointly in relation to the scheme in all respects, and

(b)

unless the context requires otherwise, a reference in this Act to—

(i)

a local authority, in relation to a VL scheme or to a proposed scheme, is a reference to the authorities acting jointly,

(ii)

the area of a local authority is a reference to the combined areas of those authorities, and

(iii)

the local tourism strategy of a local authority is a reference to any tourism strategy prepared by an authority which is in effect in all or part of the area to which the VL scheme applies.

F212APermitted deduction by liable persons from levy payable

(1)

In introducing or modifying a VL scheme, a local authority may permit liable persons to deduct and retain an amount from the levy payable in respect of a chargeable transaction.

(2)

If a local authority permits deductions to be made by liable persons under subsection (1), it must set the maximum amount of such a deduction in relation to the VL scheme

(in this Act, the maximum amount set in relation to a VL scheme is referred to as “the permitted deduction”).

(3)

The permitted deduction may be—

(a)

a fixed amount, or

(b)

a percentage of the amount of the levy payable in respect of a chargeable transaction.

(4)

The permitted deduction may be different for different purposes.

(5)

The power under subsection (1) may be exercised by a local authority only if it is satisfied that it is appropriate to do so to take account of administrative costs that may be incurred by liable persons in connection with the VL scheme.

12BRegulations: further provision about deductions by liable persons from levy payable

(1)

The Scottish Ministers may by regulations make further provision for or in connection with local authorities permitting liable persons under section 12A(1) to deduct and retain an amount from the levy payable in respect of a chargeable transaction.

(2)

Regulations under subsection (1) may, in particular, make provision about—

(a)

local authorities disallowing the deduction and retention of such amounts in relation to relevant periods (within the meaning of section 26(4)),

(b)

the procedure applying in connection with decisions of local authorities to disallow the deduction and retention of such amounts,

(c)

time limits for payment of amounts of unpaid levy following decisions of local authorities to disallow the deduction and retention of such amounts,

(d)

the effect of decisions of local authorities to disallow the deduction and retention of such amounts for the purposes of the imposition of penalties under Chapter 3 of Part 5.

(3)

Regulations under subsection (1) may modify any enactment (including this Act).

(4)

Regulations under subsection (1)—

(a)

are subject to the affirmative procedure if they add to, replace or omit any part of the text of an Act,

(b)

otherwise, are subject to the negative procedure.

13Prior consultation on scheme

(1)

Before introducing or modifying a VL scheme, a local authority must—

(a)

prepare and publicise—

(i)

an outline of the proposed scheme or (as the case may be) the scheme as it is proposed to be modified (“the proposal”),

(ii)

a statement about the cases and circumstances under the proposal in which the levy (or a sum equivalent to the levy) is not payable or may be reimbursed,

(iii)

a statement about the objectives of the proposal, including how the authority intends to measure and report on the achievement of those objectives, and

(iv)

an assessment of the impacts of the proposal in the authority’s area,

(b)

consult—

(i)

such persons as the authority considers to be representative of communities, businesses engaged in tourism and tourist organisations in its area,

(ii)

in the case of a modification of a VL scheme, the VL forum for that scheme as established by the local authority in accordance with section 16(1),

(iii)

if any part of the area to which the VL scheme relates has been designated as a National Park, the National Park authority for that Park, and

(iv)

such other persons as the authority considers likely to be affected by the proposal,

(c)

prepare and publicise a report which—

(i)

summarises the consultation responses received,

(ii)

states whether or not the authority intends to proceed with the proposal (or the proposal as modified in light of the consultation), and

(iii)

sets out the authority's reasons for whether or not it intends to proceed.

(2)

For the purposes of subsection (1)(a)(iii) the objectives must relate to developing, supporting or sustaining facilities or services which are substantially for or used by persons visiting the scheme area for leisure or business purposes (or both).

(3)

For the purposes of subsection (1)(a)(iv) the assessment must, in particular, set out what the local authority considers to be the likely effects of the proposal on—

(a)

persons living within the scheme area, and

(b)

such other persons as the authority considers likely to be affected by the proposal.

(4)

Before revoking a VL scheme, a local authority must publicise the proposed revocation of the scheme.

14Required content of a scheme

(1)

A VL scheme must specify—

(a)

the scheme area,

(b)

the date on which the scheme is to come into force,

(c)

the scheme period (that is, the period during which the scheme is to remain in force (which may be indefinitely)),

F3(d)

when, during the scheme period, the taking of entry to overnight accommodation in exercise of the right to reside in or at the accommodation is to give rise to the levy (which may be at all times during the scheme period),

F4(da)

the basis on which the levy is to be charged in respect of each chargeable transaction to which the scheme relates in accordance with section 4A,

F5(e)

either (as the case may be)—

(i)

the percentage rate (or rates) of the levy set by the local authority under section 6, or

(ii)

the fixed amount (or amounts) of the levy set by the local authority under section 6A,

(f)

the scheme’s objectives,

F6(fa)

whether liable persons are permitted to deduct and retain an amount from the levy payable in respect of a chargeable transaction (not exceeding the permitted deduction set under section 12A(2)) and, if so, the amount of the permitted deduction,

(g)

arrangements for the review of decisions by the authority in relation to the scheme,

(h)

the cases or circumstances in which the levy (or a sum equivalent to the levy) is not payable or may be reimbursed,

(i)

that the levy (or a sum equivalent to the levy) is not payable or is to be reimbursed in a case where the visitor or any other person utilising the right to reside in the overnight accommodation is F7entitled to benefits, payments or allowances F8...—

(i)

under section 71 of the Social Security Contributions and Benefits Act 1992 (disability living allowance),

(ii)

F9... in accordance with regulations made under section 31 of the Social Security (Scotland) Act 2018 (disability assistance),

(iii)

under section 64 of the Social Security Contributions and Benefits Act 1992 (attendance allowance),

F10(iv)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(v)

under Part 4 of the Welfare Reform Act 2012 (personal independence payment),

F11(vi)

by way of war disablement pension, meaning—

(A)

any retired pay, pension or allowance granted in respect of disablement under powers conferred by or under the Air Force (Constitution) Act 1917, the Personal Injuries (Emergency Provisions) Act 1939, the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939, the Polish Resettlement Act 1947, or Part 7 or section 151 of the Reserve Forces Act 1980, or

(B)

without prejudice to the generality of sub-sub-paragraph (A), any retired pay or pension to which any of paragraphs (a) to (f) of section 641(1) of the Income Tax (Earnings and Pensions) Act 2003 applies,

(vii)

by way of war pensioners’ mobility supplement within the meaning of—

(A)

the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983 (“1983 Order”),

(B)

the Personal Injuries (Civilians) Scheme 1983,

(C)

the 1983 Order by virtue of the War Pensions (Naval Auxiliary Personnel) Scheme 1964,

(D)

the Pensions (Polish Forces) Scheme 1964,

(E)

the War Pensions (Mercantile Marine) Scheme 1964, or

(F)

an Order of His Majesty in relation to the Home Guard dated 21 or 22 December 1964, or in relation to the Ulster Defence Regiment dated 4 January 1971,

(viii)

referred to in section 30A of the Social Security Contributions and Benefits Act 1992 (incapacity benefit),

(ix)

under Part 5 and section 103 of the Social Security Contributions and Benefits Act 1992 (industrial injuries disablement benefit),

(x)

referred to in sections 68 and 69 of the Social Security Contributions and Benefits Act 1992 (severe disablement allowance),

(xi)

under Part 1 of the Welfare Reform Act 2007 (employment and support allowance),

(xii)

paid in accordance with article 24A of the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 (armed forces independence payment), or

(xiii)

awarded by virtue of section 12(2)(b) of the Welfare Reform Act 2012,

F12(ia)

that the levy (or a sum equivalent to the levy) is not payable or is to be reimbursed in a case where the visitor or any other person utilising the right to reside in the overnight accommodation is a person—

(i)

to whom any of the following apply—

(A)

Title III of Part 2 of the EU withdrawal agreement,

(B)

Part 3 or Article 23(4) of the Swiss citizens’ rights agreement within the meaning of section 39(1) of the European Union (Withdrawal Agreement) Act 2020 (“the 2020 Act”),

(C)

Title III of the EEA EFTA separation agreement (within the meaning of section 39(1) of the 2020 Act),

(D)

the agreement constituted by the exchange of letters set out in the schedule of the Family Allowances, National Insurance and Industrial Injuries (Gibraltar) Order 1974, or

(E)

the agreement constituted by the exchange of letters set out in the schedule of the Social Security (Gibraltar) Order 2024,

(ii)

to whom any of the following apply by virtue of one of the agreements referred to in sub-paragraph (i)—

(A)

Council Regulation (EC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community,

(B)

Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, or

(C)

in relation to an individual to whom the agreement constituted by the exchange of letters set out in the schedule of the Family Allowances, National Insurance and Industrial Injuries (Gibraltar) Order 1974, or the Social Security (Gibraltar) Order 2024 applies, a Regulation mentioned in sub-sub-paragraph (A) or (B) as it forms part of domestic law by virtue of section 3 of the European Union (Withdrawal) Act 2018,

(iii)

who is resident in the United Kingdom, and

(iv)

who is entitled by virtue of an agreement referred to in sub-paragraph (i) to a benefit, payment or allowance equivalent to those listed in paragraph (i), under the legislation of—

(A)

Switzerland,

(B)

an EEA state, or

(C)

Gibraltar,

(ib)

that the levy (or a sum equivalent to the levy) is not payable or is to be reimbursed in a case where the visitor or any other person utilising the right to reside in the overnight accommodation is a person—

(i)

to whom the Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland signed at Dublin on 1 February 2019, as modified from time to time in accordance with any provision of it, applies,

(ii)

who is resident in the United Kingdom, and

(iii)

who is entitled by virtue of the agreement referred to in sub-paragraph (i) to a benefit, payment or allowance equivalent to those listed in paragraph (i) under the legislation of Ireland,

(ic)

that the levy (or a sum equivalent to the levy) is not payable or is to be reimbursed in a case where the visitor or any other person utilising the right to reside in the overnight accommodation is a person who is—

(i)

resident in the United Kingdom, and

(ii)

entitled to a benefit, payment or allowance equivalent to those listed in paragraph (i) under the legislation of Northern Ireland,

(j)

arrangements for the administration of the exemption or reimbursement specified in accordance with F13paragraphs (i) to (ic), including the evidence required and manner in which it may be demonstrated that a visitor or other person is F14entitled to the relevant benefit, payment or allowance,

(k)

arrangements for the reimbursement of the levy (or a sum equivalent to the levy) to a F15person who has (or a category of persons who have) entered into a chargeable transaction or a subsequent transaction, and

(l)

the manner in which the authority intends to make decisions on the use of the net proceeds of the scheme.

(2)

For the purposes of subsection (1)(h), the VL scheme must specify whether the levy is not payable in relation to accommodation which has an annual turnover below the VAT threshold.

(3)

The date on which a VL scheme is to come into force F16... must be at least 18 months after the date on which the local authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal.

F17(3A)

If a VL scheme is in force, the date on which a significant modification of the scheme is to take effect—

(a)

in the case of a modification of the type mentioned in paragraph (a) or (c) of subsection (4), must be at least 18 months after the date on which the local authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal,

(b)

in the case of a modification of the type mentioned in paragraph (b), (ba) or (bb) of subsection (4), must be at least 6 months after the date on which the local authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal.

(3B)

If a VL scheme is not yet in force, the date on which a significant modification of the scheme is to take effect must be at least 18 months after the date on which the local authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal.

(4)

In F18subsections (3A) and (3B), “significant modification” means a modification of a VL scheme which F19does any of the following—

(a)

expands the scheme area,

F20(b)

in the case of a VL scheme under which the levy to be charged is based on a percentage rate (or percentage rates), increases the percentage rate (or rates) of the levy,

(ba)

in the case of a VL scheme under which the levy to be charged is a fixed amount (or fixed amounts), increases the fixed amount (or amounts) of the levy,

(bb)

changes the basis on which the levy is to be charged from that mentioned in paragraph (a) of section 4A(2) to that mentioned in paragraph (b) of that subsection (or vice versa),

(c)

removes from the VL scheme any cases or circumstances in which the levy (or a sum equivalent to the levy) is not payable or reimbursed.

(5)

Any other modification of a VL scheme may come into force on a date specified after the authority publishes a report under section 13(1)(c) stating that it intends to proceed with the original or modified proposal.

(6)

The Scottish Ministers may by regulations amend subsection (1) so as to—

(a)

add something that a VL scheme must specify, or

(b)

remove, or vary the description of, any of the required content of a VL scheme listed in subsection (1) (except subsection (1)(e)).

(7)

The Scottish Ministers may by regulations amend subsection (4) so as to add to, remove, or vary the description of the modifications listed.

(8)

Before making regulations under this section, the Scottish Ministers must consult—

(a)

local authorities,

(b)

such persons as they consider to be representative of communities, businesses engaged in tourism and tourist organisations, and

(c)

such other persons as they consider appropriate.

(9)

Regulations under this section are subject to the affirmative procedure.

(10)

In this section, “the VAT threshold” means the amount for the time being specified in paragraph 1(1)(a) of schedule 1 of the Value Added Tax Act 1994.

15Publicity for introduction of scheme

(1)

As soon as reasonably practicable after the date of its decision to introduce a VL scheme, the local authority must—

(a)

notify the Scottish Ministers of its decision to introduce a VL scheme, and

(b)

publicise—

(i)

its decision to introduce a VL scheme, and

(ii)

the proposed date on which the VL scheme is to come into force.

(2)

The Scottish Ministers may by regulations make further provision about how local authorities must publicise the matters mentioned in subsection (1)(b).

(3)

Regulations under subsection (2) are subject to the negative procedure. 

16Visitor levy forum

(1)

A local authority operating a VL scheme must—

(a)

by no later than 6 months after the date of its decision to introduce a VL scheme, establish a forum for the scheme (“the VL forum”) to carry out the functions set out in subsection (2),

(b)

maintain the VL forum for the duration of the scheme, and

(c)

ensure that the VL forum—

(i)

is able to carry out those functions, and

(ii)

meets on a regular basis, being not less than 2 times in each calendar year.

(2)

The functions of the VL forum are—

(a)

to discuss and advise the authority and any other person or body consulting the forum on matters having to do with the VL scheme,

(b)

to discuss and respond to each—

(i)

consultation on a modification of the VL scheme under section 13(1)(b), and

(ii)

consultation on the use of net proceeds of the VL scheme under section 19(2), and

(c)

to discuss and make such representations as are considered appropriate in relation to each—

(i)

annual report on the VL scheme under section 20, and

(ii)

report setting out the findings of a review of the VL scheme under section 21.

(3)

The VL forum is to consist of such persons as are appointed to it by the local authority operating the VL scheme.

(4)

The local authority must ensure that the membership of the VL forum—

(a)

includes such persons as the authority considers to be representative of communities, businesses engaged in tourism and tourist organisations in its area, and

(b)

consists of a reasonable balance of such persons.

(5)

The local authority may appoint one or more of its own members to the VL forum, provided that local authority members do not form a majority of the members of the VL forum.

(6)

If there is more than one VL scheme for different parts of a local authority area—

(a)

more than one VL forum may be established for the area of a local authority, but

(b)

a single VL forum may be established for the purposes of this section and the schemes in the different parts of a local authority area.

17Transitional provision

(1)

The levy must not be charged in respect of a chargeable transaction that is paid for (in full or part) before the date of the local authority's decision to introduce a VL scheme.

(2)

The levy may be charged in respect of a chargeable transaction that is paid for (in full or in part) after the date of the local authority's decision to introduce a VL scheme but before the date on which the VL scheme comes into force, if the visitor takes entry to the accommodation that the transaction relates to after the date on which the scheme comes into force.