October 28, 2014 / 2:36 PM / 4 years ago

More Scottish tax powers could create loopholes, accountants say

A supporter of the "Yes" campaign reacts in George Square after the referendum on Scottish independence in Glasgow, Scotland September 19, 2014. REUTERS/Cathal McNaughton/Files

LONDON (Reuters) - Giving Scotland more tax-raising powers would increase the complexity of Britain’s already-lengthy tax code and may create new loopholes for tax avoidance, accountants and tax advisors

told British legislators on Tuesday.

Scottish voters rejected independence from Britain in a referendum last month, swayed in part by British politicians’ promises of a greater say in managing their own affairs, including more powers to set their own tax rates.

But advisers and accountants told the British parliament’s Treasury Committee, which is considering the changes, that this could bring costs from lost tax revenue and extra paperwork for taxpayers.

“The more tax that is devolved, the greater the complexity that arises,” Patrick Stevens of Britain’s Chartered Institute of Taxation said.

Scotland has not used the limited powers it was granted in 1998 to vary income tax rates, but the pro-independence Scottish National Party - which currently controls the Edinburgh administration - wants full control over the tax system.

However different rates of income tax, corporation tax or inheritance tax in Scotland could create new opportunities for tax avoidance across Britain, they said.

“To the extent that there is going to be devolution with a change in the tax itself then that could create uncertainty or complexity, and avoidance,” said Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants (ACCA).

Complexities would arise from identifying who counted as a Scottish tax payer for income tax and inheritance tax purposes, as well as whether financial assets were located in Scotland or elsewhere in the United Kingdom.

Reporting by Ahmed Aboulenein; Editing by Angus MacSwan

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