SCOTTISH taxpayers who file their self-assessment returns online face extra problems as a result of the cross-border income tax gap, experts have warned.

The Association of Taxation Technicians (ATT) said around 10,000 Scottish taxpayers had already been affected by glitches in the system for the 2017/18 tax year.

It said this was likely to carry into the next year because of problems with the software used by HM Revenue and Customs (HMRC) to calculate the correct amount of tax owed.

Although such issues are not unique to Scotland, the ATT said they were exacerbated by the divergence in income tax rates between Scotland and the rest of the UK.

In this week’s budget, SNP finance secretary Derek Mackay announced a record tax gap in 2019/20, freezing the higher rate threshold at £43,430 as it rises to £50,000 in England.

The ATT said the complexity and differences in the two tax regimes generated ‘exclusions’, the term for self-assessment tax returns being excluded from the online system because the software refuses to compute the correct tax liability.

The ATT urged the Scottish Government to work with HMRC more closely to ensure Scottish taxpayers were not adversely affected by the software snags.

Of the 38 known HMRC exclusion glitches, three are Scottish only, with a fourth expected.

Senga Prior, ATT’s Scottish spokesperson, said: “Problems with exclusions aren’t unique to Scotland, but they are exacerbated by the divergence in income tax rates between Scotland and the rest of the UK. This has resulted in an increasing number of Scottish taxpayers in self-assessment being required to submit their tax returns on paper, instead of electronically.

“If the individual doesn’t realise an exclusion applies – and they can be hard to spot - it could be many months before HMRC are able to identify and correct these errors.

“Even when a taxpayer spots an exclusion and files their tax return on paper, they face upwards of a three-month wait to find out the correct amount of tax to pay.”