While the outcome of the General Election may have delivered a degree of short-term stability to our economic landscape, it is far from clear what impact a Conservative majority combined with the unprecedented numbers of SNP MPs at Westminster will mean in terms of taxation and the wider economy north of the Border.
Regardless of how they voted in last year's independence referendum, most Scottish business people whom I speak to are keen to move away from constitutional issues and focus upon creating an environment where they can create jobs and prosper. The SNP, under Nicola Sturgeon's leadership, has made clear that a second referendum is not at present on the agenda but the UK Government will also need to play its part to avoid creating a situation that might justify a change to this position. While we are unlikely to see "business as usual", it remains to be seen whether the Tories will go far enough and whether the SNP will accept anything short of full fiscal autonomy.
Putting the transfer of additional powers to Holyrood aside, even the more limited ones set out in the Smith Commission proposals will have implications on the Scottish taxpayer.
The Scottish Rate of Income Tax (SRIT) is already on course to be introduced in April 2016, the level of which is likely to be announced by early next year. Its introduction will enable the SNP to deliver its pledge to reintroduce the 50 per cent top rate of income tax north of the Border, should it wish to make its mark. However, the response to the UK Government's mini Budget statement on July 8 will be intriguing. If the Tories stick to their pledge of no income tax rises for five years, will it be politically acceptable for the SNP to impose one north of the Border?
HMRC, which is handling SRIT, claims it is not anticipating many issues in identifying who qualifies as a Scottish tax payer. This will be based on where people live and, perhaps, where they keep their cat being the deciding factor. The organisation is, however, anticipating 80,000 changes in address on an annual basis. This will provide it with a significant administrative challenge. As soon as there is a difference in rate across the Border, keeping tax avoidance under control will be a priority for HMRC and I understand that provisions are already being put in place.
Potential tax implications for Scotland are not, of course, limited to Holyrood over the next five years. Both the Conservatives and SNP included clear statements in their manifestos to continue to increase tax paid by banks. The recent Finance Act has already legislated for an increase in the bank levy and other changes around the use of tax losses that will adversely impact on banks.
The governments in London and Edinburgh need to strike the balance between sensible regulation and what are deemed to be fair levels of tax on banks and encouraging them to continue to grow here as key employers and funders for UK businesses. This, of course, equally applies to every global organisation, and not just banks. Whether HSBC decides to retain its international headquarters within the UK has any influence on future levies remains to be seen.
In addition, both the SNP and Conservatives are also likely to continue to focus on closing tax avoidance across the UK.
Along with its wider impact on the UK's economy, the Tory Government-led in/out EU referendum and a potential exit from Europe would have the most significant implications in terms of National Insurance, VAT and the corporate tax system. EU rules require member states to adopt a value added tax system that complies with its code with differing VAT rates ranging from 15 to 25 per cent across Europe. Meanwhile, there are also rules affecting National Insurance contributions whereby, in some circumstances, citizens from EU member states are not required to pay these.
Although it is not entirely clear what the ultimate impact would be, this uncertainty adds to the wider tax challenges ahead for the business community and all other taxpayers alike in Scotland going forward.
Susie Walker is a tax partner at Johnston Carmichael.
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