I was asked this week to comment on some of the initial tax related issues that the Scottish Parliament might have to consider if Scotland votes ‘YES’.

The first comment I made was that the Scottish Parliament should pretty much enact the UK tax system on independence.  The Scottish Parliament should then take its time in deciding what to keep and what to change.  That said, there are a number of matters it might have to look at early on.

Let’s start with VAT.  Only if Scotland becomes independent will it have control, or at least as much control as is possible, of VAT.  The Scottish Parliament could reduce the VAT rate on home repairs and renovations to 5%.  Something our building industry has long been arguing for.  The Scottish Parliament could also ensure that Police and Fire & Rescue Scotland can recover their VAT costs.  This is something the UK Treasury has so far resisted.

The Scottish Parliament could look again at what constitutes a charity in Scotland and with that which entities should receive the associated tax and other benefits.  “Private” or “independent” schools for example.  This is an issue that should not just be left to OSCR, the body that regulates charities in Scotland.

Then there is the debate surrounding a European Union “financial transaction tax”.  An independent Scotland will have to consider its position on this.  If a number of European countries decide to go ahead with this then the Scottish Parliament will have to decide if it wants to join them.  One option could be to agree to a FTT and at the same time abolish stamp duty on shares.

Now to environmental taxes.  The Scottish Parliament might want to consider introducing a carbon tax.  The debate in Australia shows how difficult this might be.   Independence does though mean tough decisions.

Then there is local taxation.  I am sure “Land Value Tax” supporters will be pressing their case even more strongly if Scotland votes ‘YES’.

Now to administration.  Lots of opportunities here for simplifying things. There is no need for Scotland to have a separate Companies House, Stamp Office and Registers of Scotland.  “One stop shops” for the services provided by these bodies is a minimum of what we could do.  We could even create “tax and benefits” centres throughout the country that are based in our local authority buildings.

Then there is “tax avoidance” and “tax evasion”.  The Scottish Parliament could consider publishing at least a summary of each tax return or legislate for published beneficial ownership registers.

Just a few thoughts.

I was interested to see that OSCR, Scotland’s charity watchdog, has authorised Scotland’s 23,500 charities and voluntary organisations to take an active role in the independence debate if they wish.

One issue that is important to the charity sector is tax.  Charities for the most part do not pay tax.  Another important issue for the charity sector is administration and in particular when applying to become a charity.

It will be a surprise to many that just because a charity is registered with OSCR it is not automatically entitled to the various applicable tax reliefs.  A charity has to make a separate application to HMRC.

This causes two complications.  Charity law in Scotland differs from that of the rest of the UK.   For example Scotland’s list of “charitable purposes” is different. That is the first complication.

The second complication is that HMRC apply English and Welsh charity law principles.  This means that there is potentially less work for let’s say an English registered charity, as its original application to its Charity Commission was based on English and Welsh legal principles. A Scottish charity has to also ensure its application to HMRC meets English and Welsh charity law.

It this a huge issue? No.  Is it an issue that can cause problems?  Yes.  Was there a simple solution?  Of course there was.

The simple solution was if a charity is recognised by OSCR it should automatically be recognised by HMRC.  This was a matter I and others argued for before the Calman Commission.  Tax simplification is often talked about but rarely achieved.  This was an obvious opportunity.

How did I get on I hear you ask?  Not only did Calman not agree to this relatively simple measure but recommended that that some parts of Scottish charity law should be re-reserved.

The Scotland Act 2012 did not in fact re-reserve this area of responsibility in whole or even part.  I suspect that the main reason for this was how this would have looked at this particularly politically sensitive time.   The Scotland Act did in fact do nothing on this particular matter.

Possibly something for charities in Scotland to reflect on.