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Finance and Constitution Committee 05 October 2016

05 Oct 2016 · S5 · Finance and Constitution Committee

Item of business

Land and Buildings Transaction Tax

Lady Rice Watch on SPTV

Charles Nolan is our interim appointee, approved by members, until 1 April next year. He came on board at the beginning of the summer and has jumped in with two feet and added huge value right from the beginning. The transition has been quite seamless for us. He is a professor of economics at the University of Glasgow, but he worked in forecasting at the Bank of England in the early part of his career. Therefore, he brings a different perspective to our conversations, which is very good. Campbell Leith is also a professor of economics at the University of Glasgow. Although there were lots of inputs into the outturn report, it was absolutely led and shaped by him in the late spring and the early summer. I thank both individuals. I will give a tiny bit of context. I remind the committee—I know that the committee knows this, but I remind people who have any interest in the matter of this all the time—that the commission is in the third year of acting as a body that scrutinises forecasts that are produced by the Government. We scrutinise forecasts and report on our findings; that is our only remit now. We do not do the forecasting, but we are getting ready to begin that as of next April. In recent evidence sessions, there has been chat about all the different reports that seem to reflect property transactions and the LBTT take. I give a quick reminder in layman’s terms that, for any property transaction, we have the date of the transaction, which leads to the requirement that some tax be paid, but the payment of the tax is generally subsequent to the date of the transaction. If the property transaction is towards the end of the month, the tax might well be recorded by Revenue Scotland in the following month. Therefore, there is a bit of a disparity if we look at the month figures. Registers of Scotland then registers the transaction, but it waits until the tax return has been filed and the tax is in. There is a sequence. Registers of Scotland will include all properties that do not attract the requirement for LBTT, including all transactions under £145,000. Obviously, those of us who look just at tax do not need to look at those transactions. Finally, we believe that the Scottish Property Federation, which also publishes statistics, works on a calendar year rather than the fiscal year, so there are different timeframes. We remind ourselves about those differences, but it is probably important to restate them here. We believe that, if we go to the raw data behind Revenue Scotland’s and Registers of Scotland’s data, we can reconcile those numbers with ours, so we are not troubled by what appear to be disparities in the published reports. If the committee is interested in forestalling as a phenomenon, it should probably not use the Registers of Scotland data because the way in which it smooths the activity does not give as clear a picture and it does not collect data to reflect forestalling. I think that that is all I have to say. The outturn report that I think the committee wants to consider is based, as it states, on Revenue Scotland outturn numbers, so that is the relationship that we have used. We look forward to the committee’s questions.

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Finance and Constitution Committee 05 October 2016

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