Creating a new tax system
The implementation of a new system to collect the three new taxes introduced by the Scotland Act undoubtedly presents a massive challenge for the Scottish Government, but also a big opportunity.
The Government’s decision to go it alone by using Revenue Scotland should mean collecting these taxes (and potentially corporate tax) need not be hampered by the legacy systems of HMRC. These were introduced in a different era of IT functionality, and have struggled to keep pace with leaps in technology and connectivity.
In contrast, a system designed from scratch can reflect the modern connected economy, allowing businesses and individuals easier access and greater flexibility to manage their tax affairs.
If the Scottish Government can get this right it will not only serve the obvious function of collecting tax as cheaply and efficiently as possible, but will also justify its decision to go it alone with Revenue Scotland.
It will also send a strong message about the Government’s economic credibility, which is critical for realising the economic benefits from taking control of corporate taxes.