Appendix B

Comparison of Published Statistics with Revenue Scotland’s Annual Report and Financial Statements

The purpose of this appendix is to explain how Revenue Scotland’s monthly LBTT statistics, quarterly SLfT statistics and annual statistics (this publication) relate to the revenue figures that appear in the Devolved Taxes Account in Revenue Scotland’s Annual Report and Financial Statements (referred to in this annex as the ‘Annual Report’), as the figures are produced on a different basis.

Appendix B (i) - comparison of LBTT statistics with published accounts

Whereas the figures in the Annual Report are, by their nature, fixed for a given year (at the point at which the accounts are closed), the published statistics are updated on a monthly basis with changes largely reflecting ADS reclaims (and some other amendments) which have been received after the original LBTT tax returns were submitted.

The Annual Report and published statistics are both based on the date the LBTT return is submitted but with some adjustments made to the Annual Report¹⁹ to accrue revenue for LBTT returns (and claims for repayment of ADS) received in April and May (after the end of the financial year) with an effective date (or sale date for the previous main residence) relating to the previous financial year or earlier. These April/May adjustments typically result in relatively small differences between the Annual Report and published statistics, although the difference was more pronounced in the first year of LBTT (2015/16) because there were no “reverse accruals” relating to the previous year.

Differences in reported figures are mainly due to the different treatments of claims for repayment of ADS in the Annual Report and published statistics. This annex focuses on differences arising due to the different treatments of claims for repayment of ADS and is intended to help the reader make meaningful comparisons between the two sources of financial information.

The published statistics allocate claims for repayment of ADS to the period in which the LBTT return (with ADS declared due) was originally submitted. The accounts published in the Annual Report typically allocate claims for repayment of ADS to the accounting year in which the claim for repayment was received. For example, a claim for repayment of ADS received in June 2019 relating to an LBTT return originally received in March 2019 would be allocated to March 2019 (2018/19) in the published statistics and to 2019/20 in the Annual Report. This repayment could not be allocated to 2018/19 in the accounts because the 2018/19 accounts were closed as at 31 May 2019.

Table 16: LBTT excluding ADS and gross ADS declared due and the value of ADS repayments claimed by year the LBTT return/claim for repayment was received and the year the claim relates to

Notes:

1. For example, a claim for repayment of ADS received in 2017/18 relating to an LBTT return (with ADS declared due) originally received in 2016/17 would relate to 2016/17 (i.e. the year the LBTT return was received) 2. Revenue Scotland Annual Report and Financial Statements. See: https://www.revenue.scot/about-us/publications/corporate-documents 3. All figures are as at the end of the relevant financial year and have not been revised

Key figures in Table 16 that help illustrate the different treatment of claims for repayment of ADS are the £2.0 million and £19.3 million of claims for repayment of ADS received in 2020/21 relating to LBTT returns initially received in 2018/19 and 2019/20, respectively (and to a lesser extent, the £0.1 million relating to 2017/18). In the published statistics, these claims do not result in any adjustment to the net ADS declared due in 2020/21. However, the net ADS reported in the statistics against 2018/19 and 2019/20 is revised (reduced) to reflect these claims as they relate to ADS originally declared on LBTT returns received in those financial years.

In the Annual Report, these repayments are reported as reductions in revenue in 2020/21 as they were received after the accounting periods for 2018/19 and 2019/20 were closed, and hence the accounts for 2018/19 and 2019/20 are not revised. Therefore, to compare the published statistics for LBTT relating to 2020/21 (as at the 31st March 2021 20) with the LBTT revenue reported in Revenue Scotland’s 2020/21 Annual Report (accounts), the ADS repayment claims received during 2020/21 relating to earlier year (£0.1 million for 2017/18, £2.0 million for 2018/19 and £19.3 million for 2019/20) should be deducted from the statistics21.

Table 16 shows that the ‘Devolved Taxes figure for LBTT’ in Revenue Scotland’s accounts and the ‘Net LBTT’ figure taken from the published statistics (adjusted for ADS reclaims in previous years, as discussed above) can broadly be reconciled. There are some other reasons for differences, but these are generally more minor and it is not practical to adjust the statistics for all possible differences.

The most significant of these is the impact of the accounting ‘accruals process’ which attributes revenue in the first 2 months of the accounting year (April and May) to the previous financial year if the ‘effective date’ of the relevant transaction was before 1 April. For every financial year there is revenue coming in from April and May of the following year (accruals) and revenue subtracted (reverse accruals) from April and May of the year in question which was included in the accounts of the previous year.

The accruals and reverse accruals often roughly cancel out, but for 2015/16, 2019/20 and 2020/21 there were more noticeable difference which in turn resulted in more significant differences between ‘Net LBTT’ and ‘Devolved Taxes figure for LBTT’ in Table 16.

For 2015/16, no LBTT revenue where the tax returns were received in April or May 2015 were accrued into 2014/15 in the annual accounts (as LBTT was only introduced in April 2015), but 2015/16 included some revenue for returns received in April and May 2016 with effective dates before 1 April 2016.

For 2019-20, accruals from April and May 2020 (into 2019/20) were reduced as a result of the impact of the COVID-19 pandemic which significantly impacted LBTT revenue in late March and April/May 2020. This resulted in a lower figure in the accounts (£597.4 million) than in the net figure shown in Table 16 (£604.2 million), a difference of nearly £7 million.

The opposite effect is seen for 2020/21 where the accrual into the accounts (from April/May 2021 into 2020/21) outweighs the accrual from April/May 2020 into 2019/20. In this case the figure in the accounts for 2020/21 (£517.4 million) is around £7 million more than the net figure in Table 16 (£510.9 million).

Appendix B (ii) – comparison of SLfT statistics with published accounts

Table 17: Comparison of SLfT declared due reported in Revenue Scotland statistics with SLfT revenue reported in the Revenue Scotland Annual Report and Financial Statements

Notes:

1. Revenue Scotland SLfT Official Statistics.

See https://www.revenue.scot/about-us/publications/statistics/scottish-landfill-tax-statistics

2. Revenue Scotland Annual Report and Financial Statements.

See https://www.revenue.scot/about-us/publications/corporate-documents

Table 17 compares the SLfT declared due reported in Revenue Scotland Official Statistics with the SLfT revenue figures reported in Revenue Scotland’s Annual Report.

These statistics are reported in relation to the quarter in which the landfill disposal took place. For example, if a landfill operator submits an SLfT tax return in August 2018 relating to the quarter April - June 2018, the tax declared due is reported against that quarter (i.e. April - June 2018). Landfill operators have 12 months from the “relevant date” to amend their tax return and Revenue Scotland SLfT Statistics are revised up to 12 months after the quarter in question. If additional tax is declared, or identified through Revenue Scotland compliance activities, after this 12 month period, the statistics are not revised. This is to minimise the risk of disclosing Protected Taxpayer Information by updating tonnages and revenues by quarter, potentially showing changes relating only to single operators, or very small numbers of operators.

The Annual Report (accounts) reports revenue against the year in which the revenue was realised, with accrual adjustments in April and May. Unlike the statistics, any additional revenue (or reductions in revenue) realised during a financial year (but potentially relating to earlier years) will be reported as revenue in the accounts during that year and may lead to a difference between SLfT reported in the statistics and the accounts.

¹⁹ The Annual Report and Financial Statements are produced to comply with the accounting principles and disclosure requirements of the Government Financial Reporting Manual.

²⁰ See LBTT, March 2021 https://www.revenue.scot/about-us/publications/statistics/datasets

²¹ Note – the figures of £0.1 million, £2.0 million and £19.3 million for 2017/18, 2018/19 and 2019/20 can be estimated from the statistics by differencing the net ADS statistics published for March 2021 with the net ADS statistics published for March 2020.