Notes to the Accounts

1 Statement of Accounting Policies

1.1 Basis of accounting 

In line with section 12 of the Revenue Scotland and Tax Powers Act 2014 (RSTPA), and in accordance with the accounts direction issued by the Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000, these financial statements have been prepared conforming to the 2023-24 Government Financial Reporting Manual (FReM) issued by His Majesty’s Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. The particular policies adopted are described below. They have been applied consistently in dealing with items that are considered material to the accounts. 

The accounts are prepared using accounting policies, and where necessary, estimation techniques which are judged to be most appropriate to the particular circumstances for the purpose of giving a true and fair view regarding the principles set out in International Accounting Standards (IAS) 8 Accounting Policies, Changing in Accounting Estimates and Errors. 

In accordance with the FReM these accounts have been prepared under the historical cost convention and on a going concern basis, which provides that the organisation will continue in operational existence for the foreseeable future.

1.2 Accounting convention 

The accounts have been prepared in accordance with the historical cost convention modified to account for fair value of non-current assets. Expenditure has been accounted for on an accruals basis. 

1.3 New accounting standards 

Following IAS 8, changes to International Financial Reporting Standards (IFRS) that have been issued but not yet effective have been reviewed for impact on the financial statements in the period of initial application. There are no standards that are considered relevant to Revenue Scotland. This includes consideration of IFRS 17 Insurance Contracts, the implementation of which has been delayed to 1 April 2025. 

1.4 Value Added Tax (VAT) 

Revenue Scotland is registered for VAT as part of the Scottish Government VAT group registration, which is responsible for recovering VAT on behalf of Revenue Scotland. 

Revenue Scotland does not provide any chargeable services and therefore output VAT does not apply. Irrecoverable input VAT is charged to the relevant expenditure category. Where VAT is recoverable, the amounts are stated net of VAT.

1.5 Property, plant, equipment and intangible assets 

Recognition 

All property, plant, equipment and intangible assets are accounted for as non-current assets unless they are deemed to be held for sale. 

Capitalisation 

Minor expenditure on equipment and furniture are written off in the year of purchase, as are all other items of a capital nature costing less than £10,000, unless the pooled value of a programme of expenditure on items of a capital nature exceeds £10,000, then this pooled expenditure is capitalised. 

Assets under development 

Assets under development are shown separately in note 5. Costs are accumulated until the assets is brought into use whereupon it is transferred into the relevant asset class and depreciated. 

Staff costs 

Where staff have been working on the development, integration and testing of IT software, these costs are included in the amounts capitalised.

Depreciation and Amortisation 

Provision for depreciation and amortisation is made to write off the cost of non-current assets on a straight-line basis over the expected useful lives of the assets concerned. The expected useful lives of assets are regularly and systematically reviewed to ensure that they genuinely reflect the actual replacement cycle of all assets. Depreciation and amortisation are not charged on assets in the course of development until the month after they are brought into use. 

The expected useful lives are as follows: 

• computer equipment, 3 – 10 years
• IT and telephony systems, 3 – 10 years
• office equipment, 3 – 10 years 
• Furniture and fittings, 3 – 15 years. 

Asset Valuation 

Depreciated and amortised historical cost is used as a proxy for fair value since the assets are low value and have short useful lives. The majority of the intangible assets represent bespoke IT systems and there is no active market for these assets. In accordance with the FReM impairment relating to a consumption of economic benefit or reduction in service potential is taken to the SoCNE.

1.6 Financial instruments 

As the cash requirements of Revenue Scotland are met through the Scottish Government, financial instruments play a limited role in creating and managing risk. The only financial instruments within the accounts are financial assets in the form of other receivables, and financial liabilities such as trade and other liabilities. 

1.7 Leases 

Revenue Scotland has adopted IFRS 16 including the exemption for short-term leases in accordance with the FReM. This standard replaces the previous standard IAS 17. Leases which are considered to be low value or have an expected length of less than a year, are not recognised under IFRS 16 and the related costs are shown in the Statement of Comprehensive Net Expenditure. 

1.8 Pension costs 

Revenue Scotland employees are civil servants who are entitled to be members of the Civil Servant and Others Pension Scheme or the Principal Civil Service Pension Scheme. These are unfunded, multi-employer defined benefit schemes in which Revenue Scotland is unable to identify its share of the underlying assets and liabilities. The schemes are accounted for as defined contribution schemes under the multi-employer exemption permitted in IAS 19 Employee Benefits. Revenue Scotland’s contribution is recognised as a cost in the year.

1.9 Short term employee benefits 

The cost of annual leave and flexible working time entitlement earned but not taken by employees at the end of the year is recognised as an accrual of benefits in the financial statements. Employees are permitted to carry forward leave into the following year. 

1.10 Other receivables 

Other receivables are stated at their nominal value. 

1.11 Trade and other payables 

Trade payables are stated at their nominal value. 

1.12 Provisions for liabilities and charges 

A provision is recognised where an outflow of resources is expected because of a past event. These are included within the accounts at the estimated value.

2. Staff income and costs

Programme costs incurred relate to staff working on the introduction of Scottish Aggregates Tax.

3. Goods and services 

Revenue Scotland’s goods and services have been allocated as follows:

(1) In the interests of efficiency, effectiveness and economy, Revenue Scotland and the Scottish Ministers are committed to identifying opportunities for shared services. The amount represents costs charged by the Scottish Government for the following functions: 

• Human Resource management (including, for example: general terms and conditions of service, pay negotiations, pay awards, payroll, pensions, and recruitment for senior civil service posts)
• financial management (Scottish Government finance systems)
• information systems, telephony, information and library service X estates and facilities management
• internal audit
• procurement. 

(2) Delegated duties represent the amounts payable to the Scottish Environment Protection Agency in relation to the duties delegated to them under the Revenue Scotland and Tax Powers Act 2014.

4. Reconciliation of net resource outturn to net funding received

5. Non-current assets

Tangible Assets

Intangible Assets

6. Other receivables

7. Trade and other payables

8. Related party transactions 

Revenue Scotland is a Non-Ministerial Office of the Scottish Administration, and it considers that the Scottish Government, its agencies, and non-departmental bodies are related parties within this context. 

During the year, Revenue Scotland had a number of material financial transactions with the Scottish Government. Those relating to shared services provided are detailed in note 3 above. 

In line with RSTPA, section 2, Revenue Scotland has delegated some of its functions relating to SLfT to the Scottish Environment Protection Agency (SEPA). The costs incurred are provided in note 3 above. 

None of the Board members, key managerial staff or other related parties has undertaken any material transactions with Revenue Scotland during the year.

9. Audit fee

Auditor’s remuneration is disclosed as a notional charge and relates to fees notified to Revenue Scotland by Audit Scotland in respect of audit work carried out to the year ended 31 March 2024. All audit fees are paid from the Scottish Consolidated Fund. 

No non-audit work was carried out by Audit Scotland during the year ended 31 March 2024.

10. Commitments 

Revenue Commitments 

Total future minimum payments under contractual commitments are given in the tables below for each of the following periods.

The amounts above are in relation to the contracts for the provision of Revenue Scotland’s tax, finance and call management systems. The contract for the tax system expires in 2029, the finance system expires in 2024 and the call management system expires in 2024.

Capital Commitments