Landfill Tax to be collected by Revenue Scotland


The Scottish Government has revealed that it will set up a new independent authority to collect devolved taxes in Scotland from 2015.

According to the Revenue Scotland and Tax Powers Bill, published on Friday (13 December), a new authority, Revenue Scotland, will be set up to administer the two taxes to be devolved from April 2015: Land and Buildings Transaction Tax; and the proposed Scottish Landfill Tax.

Scottish Landfill Tax details

If UK Landfill Tax is replaced in Scotland from 1 April 2015 (as proposed in the Landfill Tax (Scotland) Bill), Revenue Scotland would assume responsibility for the administration of Landfill Tax from the UK government, and pay money received in the exercise of its functions into the ‘Scottish Consolidated Fund’. 

This in turn would ensure monies from Landfill Tax are paid into a 'Scottish communities fund', aimed at supporting ‘environmental organisations’ and assisting 'communities… in close proximity to landfill sites'. Further, landfill tax operators will be able to contribute 10 per cent more of their tax liability to the fund, in return for tax credits, than they would be able to under the UK limit as it will exist in 2014/15.

Notably, the bill will, for the first time, allow for tax to be recovered from landfill sites where waste has been disposed of illegally in the hopes of acting as a further deterrent to illegal dumping and encouraging the 'responsible, regulated disposal and treatment of waste'.

Revenue Scotland will also be able to delegate functions to Registers of Scotland and to the Scottish Environment Protection Agency, which already deal with registration of land transactions and with regulation of landfill. 

Speaking after laying the bill in Parliament, Finance Secretary John Swinney said: "Landfill Tax is an important driver for change in Scotland’s waste and resources management sector, making the price of landfill reflect its environmental and economic costs and helping to achieve a zero waste society and a circular economy where resources are valued.

"Scottish Landfill Tax will better align tax and environmental protection legislation, regulation and compliance regimes in Scotland.

"The Scottish Environment Protection Agency will administer the tax on behalf of Revenue Scotland, an efficient and effective Scottish solution that builds on established competence and experience here. Costs of administration are estimated to be lower than those proposed by Her Majesty’s Revenue and Customs (HMRC) for a like for like tax.

"The Scottish Landfill Tax is a further significant step towards establishing the principle that taxes paid in Scotland are best managed and set by those with Scotland’s interests in mind."

The bill also provides a legal framework for the collection of taxes devolved under the Scotland Act 2012 and outlines rules to counteract tax avoidance, including a General Anti Avoidance Rule. This will allow Revenue Scotland to ‘make such adjustments as it considers just and reasonable to counteract the tax advantages that would… arise from a tax avoidance arrangement that is artificial’.

It is hoped that by devolving the Land and Buildings Transaction Tax and the proposed Scottish Landfill Tax, Scotland will raise approximately £400 million a year and ‘ensure [the] efficient collection’ of its taxes.

'We expect Scotland to collect a much wider range of taxes'

Swinney added: "This government will take a distinctly Scottish approach to taxation, including a vigorous approach to combatting tax avoidance.

"We firmly believe that decisions about Scotland’s taxes should be taken by the people of Scotland… In Revenue Scotland we will build a tax authority and a 21st-century tax system that meets the needs of our businesses and citizens. That system will also provide a foundation for future arrangements where we expect Scotland to collect a much wider range of taxes."

Any future devolved taxes will also be administered by Revenue Scotland.

Referring to the potential of Scotland becoming independent of the United Kingdom (a referendum for which will be held in September 2014), Swinney said: "Independence will allow us to design a simpler Scottish tax system which better meets the needs of Scotland’s economy... [T]his government is committed to building a tax system which stimulates the economy, builds social cohesion and sustains Scotland’s public services."

Wales could also control its own Landfill Tax

The Welsh Government could also soon be given powers to control around £3 billion of tax revenue, including that of Landfill Tax, after the UK government accepted several proposals to bring about the devolution of several financial powers, as part of a move to ‘give the Welsh Government the tools to make the right investments in Wales’.

Government will first have to consult the European Commission to confirm its detailed plans are compatible with EU state aid rules, however, as these set out ‘strict criteria for the extent of devolution of taxes within EU member states’.

Read the Revenue Scotland and Tax Powers Bill or find out more about the devolution of Landfill Tax in Scotland.