Notes to the Accounts

• Read more about Notes to the Accounts

1. Statement of accounting policies

1.1 Basis of accounting

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 in accordance with the 2023-24 Government Financial Reporting Manual (FReM), issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. The accounting policies have been applied consistently in dealing with items considered material in relation to the accounts. The income and associated expenditure contained within these statements are those flows of funds which Revenue Scotland handles on behalf of the Scottish Consolidated Fund and where it is acting as agent rather than principal. The Devolved Taxes Account have been prepared on a going concern basis, which provides that the organisation will continue in operational existence for the foreseeable future.

1.2 Accounting convention 

The Devolved Taxes Account have been prepared in accordance with the historical cost convention. Taxes (including repayments) are accounted for on an accruals basis and where necessary, estimation techniques have been selected as the most appropriate for the purpose of giving a true and fair view in accordance with the principles set out in International Accounting Standard (IAS) 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’. 

Critical accounting judgements and key sources of estimation 

The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates. It also requires management to exercise judgement in the process of applying accounting policies. For the Devolved Taxes Account the significant assumptions and estimates are set out in the accounting policies and/or notes to the accounts. The cut-off point for accrual purposes has been set as 31 May 2024.

1.3 New accounting standards 

In accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, changes to International Financial Reporting Standards (IFRS) that have been issued but have not yet become effective have been reviewed for impact on the financial statements in the period of initial application. There are no updates to the standards that are considered to be relevant to Revenue Scotland’s Devolved Taxes Account. This includes consideration of IFRS 17 Insurance Contracts, the implementation of which has been delayed to 1 April 2025. 

1.4 The tax gap 

The tax gap is not recognised in the Devolved Taxes Account. The tax gap is the difference between the amount of tax that should, in theory, be collected by Revenue Scotland (the theoretical liability), against what is actually collected. The theoretical liability represents the tax that would have been paid if all individuals and companies complied with both the letter of the law and Revenue Scotland’s interpretation of the intention of the Scottish Parliament in setting law (referred to as the spirit of the law). Revenue Scotland undertakes compliance work in order to limit the tax gap.

1.5 Financial instruments 

Revenue Scotland collects tax revenue on behalf of the Scottish Ministers for the Scottish Consolidated Fund, therefore 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 receivables and financial liabilities in the form of payables. 

1.6 Revenue recognition – Taxation 

Taxes are measured in accordance with ‘IFRS 15: Revenue from Contracts with Customers’. They are measured at the fair value of amounts received or receivable, net of repayments. Revenue is recognised when: 

• a taxable event has occurred, the revenue can be measured reliably and it is probable that the economic benefits from the taxable event will flow to the Scottish Consolidated Fund. A taxable event therefore occurs when a liability arises to pay a tax. 

Repayments of Additional Dwelling Supplement are recognised when the taxpayer or agent submits a claim for repayment creating an obligating event, and the sale of the previous main residence falls within the reported financial year or earlier.

1.7 Revenue recognition – Penalties and Interest 

Penalties and interest are measured in accordance with IFRS 15. They are measured at the fair value of amounts received or receivable. Revenue is recognised when: 

• a penalty or interest charge is validly imposed and an obligation to pay arises. Penalty and interest revenue is de-recognised: 
• when a penalty is cancelled following the correction of a tax return arising from a minor error by the taxpayer or agent 
• where a penalty is cancelled following a review by Revenue Scotland; and 
• where a taxpayer’s appeal against the penalty is upheld by the Scottish Tribunals. Where penalty and interest revenue has been previously recognised and is later deemed uncollectable for reasons other than those shown above, this is recorded as an expense at the date of the decision. 

1.8 Contingent assets 

IAS 37: ‘Provisions, Contingent Liabilities and Contingent Assets’ defines a Contingent Asset as a possible asset, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity’s control. Contingent assets often cannot be reliably quantified; where values can be determined these have been provided. 

Contingent assets are not recognised within the Statement of Revenue and Expenditure or Statement of Financial Position but are disclosed as notes within Revenue Scotland’s accounts.

1.9 Contingent liabilities 

IAS 37: ‘Provisions, Contingent Liabilities and Contingent Assets’ defines a Contingent Liability as a possible liability, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity’s control. Contingent liabilities often cannot be reliably quantified; where values can be determined these have been provided. Contingent liabilities are not recognised within the Statement of Revenue and Expenditure or Statement of Financial Position but are disclosed as notes within Revenue Scotland’s accounts. 

1.10 Receivables 

Revenue Scotland determines impairments in accordance with IFRS 9: Financial Instruments. Impairments have been measured by applying the credit loss model set out in IFRS 9. The impairment model in IFRS 9 is based on the premise of providing for expected losses utilising available information and considering the probability of collection.

2. Revenue and other income

2.1 Taxes

Land and Buildings Transaction Tax is payable on the acquisition of a chargeable interest in, or over, land in Scotland. Additional Dwelling Supplement (ADS) is payable on the purchase of additional residential properties in Scotland. It is repayable where the taxpayer’s previous main residence is sold and the qualifying conditions are met. Scottish Landfill Tax is payable on disposals of waste material in Scotland made by way of landfill.

2.2 Penalties and interest

Penalties are charged on the late receipt of tax returns, late payments or other reasons permitted under the RSTPA. Penalties are recognised when a penalty notice has been issued to the taxpayer. Interest is charged on the late payment of tax returns or penalties.

3. Expenditure

3.1 Interest paid

Interest payable by Revenue Scotland on the repayment of any tax or penalties.

3.2 Revenue losses and gains

Revenue losses and gains are made up of revenue write-offs and the movement in the impairment of receivables (further information can be found in Note 4.2 Change to impairments). 

Debts written off are amounts that, after all reasonable action has been taken and following careful appraisal, have been considered to be irrecoverable. 

Impairment reflects the prospects of recovery in relation to debt recovery action.

4. Receivables 

4.1 Amounts due:

Receivables represents taxpayer liabilities where a liability has been assessed and not paid at the balance sheet date, including amounts due from those on whom financial penalties have been imposed prior to the balance sheet date, but not paid at that date. 

Accrued Revenue Receivable represents taxpayer liabilities which relate to the financial year but for which the liability had not been assessed as at the balance sheet date. These may include estimates made by Revenue Scotland of those activities.

4.2 Change to impairments

Impairments are debts which are currently being pursued but which are considered likely to be irrecoverable in the longer term. Receivables in the Statement of Financial Position are reported after the deduction of the estimated value of impairments. The estimate is based on a number of factors including where legal action has been initiated.

5. Cash

Cleared funds are paid over to the Scottish Consolidated Fund on a monthly basis in arrears. The above balances represent funds received from taxpayers which had not been paid over to the Scottish Consolidated Fund as at 31 March 2024 and which were paid over during 2024-25.

6. Payables and on account balances

Taxes are structured in such a manner that taxpayers are entitled to amend their return within twelve months of the effective date of the transaction and claim a repayment. Revenue repayable relates to outstanding repayments of tax or penalties, including claims for repayment of Additional Dwelling Supplement, where the amount has been established at the balance sheet date. It also includes any credit balances which may be repayable in the future.

7. Balance due to the Scottish Consolidated Fund Account

Only cleared funds are paid over to the Scottish Consolidated Fund. The balance represents accrued income and amounts that remain outstanding or funds which are still to paid over to the Scottish Consolidated Fund at the balance sheet date.

8. Contingent assets

Contingent assets can arise as a result of a deferral being granted by Revenue Scotland, or as a result of appeals to the Scottish Tax Tribunals or as a result of an enquiry into tax returns received. 

Deferrals

Property buyers can make applications to Revenue Scotland to defer the LBTT payable on a land transaction where: 

• the whole or part of the chargeable consideration is contingent or uncertain and
• the chargeable consideration becomes payable more than six months after the effective date of the transaction. 

This could include, for example, a situation where additional consideration is payable by the buyer if planning permission is obtained after the sale. 

Where a deferral has been granted, the amount of tax due is not recognised within the financial statements until the chargeable consideration materialises. The estimated timings are:

Tribunal cases 

Those aggrieved by an appealable decision made by Revenue Scotland may dispute that decision by requesting that Revenue Scotland carry out a review and/or by making an appeal to the Tax Chamber of the First-Tier Tribunal for Scotland (FTTS). Mediation may also be entered into at any time. 

Where appeals have been made to either the FTTS or Upper Tribunal, the tax revenue and any associated penalties and interest are not recognised in the Statement of Revenue and Expenditure or Statement of Financial Position but are disclosed as contingent assets due to the uncertainty of the outcome.

Further information on the nature and value of these contingent assets cannot be disclosed as to do so may result in the disclosure of protected taxpayer information.

Enquiries 

Revenue Scotland has the power to open an enquiry which can cover anything contained, or required to be contained, in a tax return relating to: 

• whether the taxpayer is liable to pay tax; and
• the amount of tax due. 

The enquiry has to be closed within 3 years of the filing date of the tax return where the filing date for LBTT is 30 days after the effective date of the transaction and for SLfT is 44 days after the end of the relevant quarter. At the conclusion of the enquiry Revenue Scotland will advise the taxpayer of the outcome and whether an amendment to the tax return and/ or the tax due is required. When the enquiry is completed and a closure notice issued, any additional tax or reduction in tax is recognised in the financial statements at the date of closure.

Revenue Scotland has a number of open enquiries into LBTT and SLfT tax returns but management are of the opinion that: 

• some of these enquiries are at an early stage and it may not yet be possible to assess with certainty the amount of tax subject to the enquiry
• to disclose values of additional tax in these circumstances may prejudice the outcome of those enquiries. 

For these reasons a value for contingent assets relating to enquiries has not been disclosed in these financial statements.

9. Contingent liabilities

Additional Dwelling Supplement 

Property buyers who have included ADS in their LBTT tax return are entitled to seek a repayment of the supplement if they meet certain criteria, including selling their previous main residence. When they submit a claim then this is recognised in the accounts in accordance with our accounting policy. 

However, where no such claim has been received there is not an ‘obligating event’ in terms of ‘IAS 37 – Provisions, Contingent Liabilities and Contingent Assets’, and as a result any amounts that may be due to taxpayers are treated as a contingent liability. 

Taxpayers are invited to indicate their intention to sell their previous main residence and seek repayment of ADS when submitting their tax return. Where taxpayers have indicated in their tax return that it is their intention to sell their previous main residence but have not done so by the end of the financial year, then the potential refund is disclosed as a contingent liability. For 2023-24 all such amounts of ADS are estimated as £51m (2022-23: £37m). 

It should be noted that this is an indicative figure, based on the information received from taxpayers in their tax return.

Enquiries 

As outlined in Note 8, Revenue Scotland has a number of open enquiries into LBTT and SLfT tax returns which may, or may not, result in additional tax or a reduction in tax liabilities. 

Management are of the opinion that: 

• some of these enquiries are at an early stage and it may not yet be possible to assess with certainty the amount of tax subject to the enquiry
• to disclose values of possible tax in these circumstances may prejudice the outcome of those enquiries. 

For these reasons a value for contingent liability relating to enquiries has not been disclosed in these financial statements.

Devolved Taxes Account 2023-24: Financial Statements

• Read more about Devolved Taxes Account 2023-24: Financial Statements

Statement of Revenue and Expenditure

for the year ended 31 March 2024

There were no recognised gains or losses accounted for outside the Statement of Revenue and Expenditure. The notes on pages 27-40 form part of these financial statements.

Statement of Financial Position

as at 31 March 2024

The notes on pages 27-40 form part of these financial statements. The Chief Executive and Accountable Officer of Revenue Scotland authorised these financial statements for issue on 24 September 2024.
Elaine Lorimer – Chief Executive of Revenue Scotland and Accountable Officer

Statement of Cash Flows

for the year ended 31 March 2024

The notes on pages 27-40 form part of these financial statements.

Independent Auditor’s Report

• Read more about Independent Auditor’s Report

Independent Auditor’s report to the Auditor General for Scotland and the Scottish Parliament

Reporting on the audit of the financial statements

Opinion on financial statements 

I have audited the financial statements in the Revenue Scotland Devolved Taxes Account for the year ended 31 March 2024 under the Public Finance and Accountability (Scotland) Act 2000. The financial statements comprise the Statement of Revenue and Expenditure, the Statement of Financial Position, the Statement of Cash Flows and the notes to the financial statements. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the 2023/24 Government Financial Reporting Manual (the 2023/24 FReM). 

In my opinion the accompanying financial statements: 

• give a true and fair view of the state of affairs of the account as at 31 March 2024 and of the net revenue for the year then ended; 
• have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2023/24 FReM; and
• have been prepared in accordance with the requirements of the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Basis for opinion 

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 3 April 2023. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the account in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the account. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern basis of accounting 

I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. 

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the account’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. 

These conclusions are not intended to, nor do they, provide assurance on the account’s current or future financial sustainability. However, I report on the account’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website. 

Risks of material misstatement 

I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon.

Responsibilities of the Accountable Officer for the financial statements 

As explained more fully in the Statement of Accountable Officer’s Responsibilities, the Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 

In preparing the financial statements, the Accountable Officer is responsible for using the going concern basis of accounting unless there is an intention to discontinue the account’s operations. 

Auditor’s responsibilities for the audit of the financial statements 

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: 

• using my understanding of the central government sector to identify that the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers are significant in the context of the account; 
• inquiring of the Accountable Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the account; X inquiring of the Accountable Officer concerning the account’s policies and procedures regarding compliance with the applicable legal and regulatory framework;
• discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and
• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. 

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the account’s controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. 

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website www.frc.org. uk/auditorsresponsibilities. This description forms part of my auditor’s report.

Reporting on regularity of expenditure and income 

Opinion on regularity 

In my opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. 

Responsibilities for regularity 

The Accountable Officer is responsible for ensuring the regularity of expenditure and income. In addition to my responsibilities in respect of irregularities explained in the audit of the financial statements section of my report, I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Reporting on other requirements 

Other information 

The Accountable Officer is responsible for the other information in the Revenue Scotland Devolved Taxes Account. The other information comprises the Foreword and the Accountability Report. 

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Foreword and Governance Statement to the extent explicitly stated in the following opinions prescribed by the Auditor General for Scotland.

Opinions prescribed by the Auditor General for Scotland on the Foreword and Governance Statement 

In my opinion, based on the work undertaken in the course of the audit: 

• the information given in the Foreword for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers; and
• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Matters on which I am required to report by exception 

I am required by the Auditor General for Scotland to report to you if, in my opinion: 

• adequate accounting records have not been kept; or
• the financial statements are not in agreement with the accounting records; or
• I have not received all the information and explanations I require for my audit. 

I have nothing to report in respect of these matters. 

Conclusions on wider scope responsibilities 

In addition to my responsibilities for the Revenue Scotland Devolved Taxes Account, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

Use of my report 

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Pauline Gillen Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT

24 September 2024

Accountability Report

• Read more about Accountability Report

Statement of the Accountable Officer’s responsibilities 

Under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000, Scottish Ministers have directed Revenue Scotland to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of Revenue Scotland and of its income and expenditure, Statement of Financial Position and cash flows for the financial year. 

In preparing the accounts, the Accountable Officer is required to comply with the requirements of the Government Financial Reporting Manual (FReM) and in particular to: 

• observe the Accounts Direction issued by Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the financial statements
• prepare the financial statements on a going concern basis
• confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.

The Permanent Secretary of the Scottish Government (SG), who is the Principal Accountable Officer for the Scottish Administration has designated, in accordance with sections 14 and 15 of the Public Finance and Accountability (Scotland) Act 2000, the Chief Executive of Revenue Scotland as Accountable Officer for Revenue Scotland. 

The responsibilities of an Accountable Officer, including responsibility for the propriety and regularity of the public finances for which they are answerable, for keeping proper records and for safeguarding Revenue Scotland’s assets, are set out in the Scottish Public Finance Manual. 

The Accountable Officer may consult with the SG Chief Financial Officer (CFO) on any aspects of the duties applying to Accountable Officers in the Scottish Administration. The Accountable Officer must consult the CFO on any action which they consider is inconsistent with their duties on financial, regulatory or propriety grounds, and specifically where they seek written authority from the Scottish Ministers or a direction from the Board of Revenue Scotland. In practice, the Chief Executive will delegate authority widely to other employees of Revenue Scotland but cannot, on that account, disclaim responsibility. The Chief Executive is responsible for informing the Principal Accountable Officer about any complaints about Revenue Scotland accepted by the Scottish Public Services Ombudsman (SPSO) for investigation and about the response to any subsequent recommendations from the SPSO.

As the Accountable Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that Revenue Scotland’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware. 

I confirm that this Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and I take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable. 

Governance Statement 

In the paragraphs below, I report on the governance arrangements in place within Revenue Scotland. 

Governance Framework 

Revenue Scotland is responsible for the administration and collection of Scotland’s wholly devolved taxes. The relevant powers and duties of Revenue Scotland, and of the Scottish Ministers are set out in the Revenue Scotland and Tax Powers Act 2014. 

Scottish Ministers are responsible for appointing the Board of Revenue Scotland following a public appointment exercise, regulated by the Commissioner for Ethical Standards in Public Life in Scotland. 

Ministers must not direct, or otherwise seek to control Revenue Scotland in the exercise of its functions but they may give guidance. This guidance must be published and laid before the Scottish Parliament unless Ministers consider that to do so would prejudice the effective exercise by Revenue Scotland of its functions. Scottish Ministers are responsible for setting rates, bands and thresholds relating to the devolved taxes, subject to the approval of the Scottish Parliament. 

The Board of Revenue Scotland is collectively responsible for the leadership and direction of the organisation and for ensuring that it carries out its statutory functions effectively and efficiently. It may delegate any of its functions to an individual Board member, a committee of the Board, the Chief Executive, or any other staff member, but it will retain its responsibility for carrying out its function. 

As the Chief Executive of Revenue Scotland, I am employed by, and accountable to, the Board of Revenue Scotland for the day-to-day running of the organisation and its operational performance. In this role I seek assurance that appropriate controls are in place across the organisation, and in respect of the partners whom we rely on to support us in delivering our objectives, and I can confirm that these have been in operation during 2023-24 and to the date of signing these accounts. 

I am supported by the Senior Leadership Team (SLT), who oversee the day-to-day business of Revenue Scotland, with each member taking responsibility for a specific area. The SLT is made up of the Chief Executive, the Head of Tax, the Head of Corporate Functions and the Head of Legal Services.

Operation of the Board and committees 

Our Board is responsible for the functions and powers of Revenue Scotland and delegates authority to staff through a Scheme of Internal Delegation. The Board sets the strategic direction for the organisation, oversees Revenue Scotland’s work and monitors performance, including the design and operation of risk and governance frameworks. They do this through scrutiny and, where appropriate, approval of: 

• corporate plans and business plans
• key strategies and policies X regular reports, including reports relating to risk management, corporate performance, tax compliance, staff, health, safety and wellbeing, changes in the devolved taxes, progress on the introduction of new taxes
• scrutiny of the Annual Reports and Accounts
• reports from the Audit and Risk and Staffing and Equalities Committees
• strategic engagement with key partners and service users. 

I can report that during 2023-24 the Board met on six occasions. This included a joint formal Board meeting and strategy session (2022-23: seven). During this time our Board scrutinised and considered a number of specific matters including:

• Revenue Scotland’s new Corporate Plan 2024-27
• the move from the hybrid pilot to hybrid working formally becoming Revenue Scotland’s ongoing operating model
• recommendations to improve compliance rates for Three-Yearly Reviews of Non-residential Leases and proposals to reduce the backlog of lease review penalties
• approval of the business case and the programme of activity required to implement Scottish Aggregates Tax
• development of the new Data and Digital Strategy
• revisions to governance documents, including the Financial Framework, Whistleblowing Policy and Risk.

Audit and Risk Committee 

The Audit and Risk Committee (ARC) supports the Board and Accountable Officer through reviewing the comprehensiveness, reliability and integrity of the assurances produced in support of the financial statements. The terms of reference of the committee are published on Revenue Scotland’s website within the Board’s Standing Orders. 

The committee fulfils its role through:

• scrutiny of risk management arrangements
• regular liaison with internal and external audit and scrutiny of their plans and reports
• considering and monitoring of responses to recommendations from internal and external auditors and other bodies
• review of the certificates of assurance produced by management as part of the financial reporting process and the Chief Executive’s governance statement, and
• overseeing the financial reporting process.

Members of the committee during 2023- 24 were Martin McEwen (Chair), Simon Cunningham (Deputy Chair) and Robert MacIntosh. 

The committee is also attended by the Chief Executive, Head of Corporate Functions, Head of Legal Services, Head of Tax, Head of Governance, the Head of Finance and representatives of internal and external audit as well as other staff as required. 

I can report that during 2023-24 the committee met six times, this included a joint quarterly committee meeting and strategy session on risk management (2022- 23: seven). The committee engaged in a number of relevant matters including: 

• consideration of reports from Internal Audit
• a strategy session to review Revenue Scotland’s corporate risk register, with a focus on risk appetite
• consideration of cyber security assurances
• consideration of assurances around the introduction of new corporate IT systems for HR and Finance 

The committee reviewed its effectiveness during 2023-24, using the checklist set out in the Scottish Government’s Audit Committee Handbook, in early 2024-25. It found no issues of concern which could affect its normal function.

Staff and Equalities Committee 

The Staffing and Equalities Committee (SEC) advises and provides assurance to our Board and Accountable Officer on issues relating to: people; equality, diversity and inclusion; and health, safety and wellbeing. 

During 2022-23, our Board reviewed the operation of the committee and agreed to pilot changes during 2023-24 aimed at ensuring a more strategic focus for the committee. Following their review, the Committee is in agreement that the new format has been a success, allowing for more strategic and focused discussions. 

The new format will continue to be used and be reviewed periodically to ensure that it continues to meet the needs of SEC and the Board. 

The terms of reference for the committee are published on Revenue Scotland’s website within the Board’s Standing Orders. The committee reviewed its effectiveness during 2023-24 and found no issues of concern which could affect its normal function. 

Members of the committee during 2023–24 were Jean Lindsay (Chair), Idong Usoro (Deputy Chair) and Ken Macintosh. Staff attendees comprise the Chief Executive, Head of Corporate Functions, Head of Legal Services, Head of Tax, Head of People Services and Head of Governance. Further staff members attend as required.

I can report that during 2023-24, the committee met three times (2022-23: three) and engaged in a number of relevant matters including supporting the development and scrutiny of: 

• the People Strategy and action plan
• staff survey
• workforce planning
• health, safety and wellbeing
• equality, diversity and inclusion. 

Assurances provided to the Chief Executive 

I have received written assurances from my Heads of Service, who have responsibility for the operation and effectiveness of internal controls within Revenue Scotland’s Tax, Legal and Corporate Functions teams. I am pleased to report that no significant matters were raised with me. 

The Accountable Officer of the Scottish Environment Protection Agency (SEPA) has provided me with assurance in respect of the statutory functions delegated to them by Revenue Scotland. No significant issues were raised with me by SEPA. 

I also receive copies of the certificates of assurance provided to the Scottish Government’s Director General Corporate, produced to support the assurances she provides to the Principal Accountable Officer in respect of the Scottish Government’s digital, financial and people services. These are shared with me as some aspects of these are relevant to the services we receive from the Scottish Government as a shared service. No significant issues were raised within these.

One issue of particular interest to Revenue Scotland raised within the SG certificates relates to the implementation of the new HR and Finance systems. I am very aware of the challenging nature of this substantial change programme and also the significant benefits that this investment in digital services will bring to both the Scottish Government and Revenue Scotland. Given the significant operational impacts for our organisation should the programme fail to deliver the intended benefits, I continue to engage closely with the Scottish Government to ensure that I continue to receive the assurance I require as Accountable Officer that the programme will be delivered effectively and that the systems will meet Revenue Scotland’s needs. 

In conclusion, I can confirm that, based on the aforementioned written assurances received, there were no significant control weaknesses identified in the period under review.

Report on personal data incidents 

Revenue Scotland manages, maintains and protects all information according to the requirements of relevant legislation, its own information policies and best practice. 

Revenue Scotland has an Information Assurance governance structure which prioritises and manages information risks. The governance structure: 

• protects the organisation, its staff and our taxpayers from information risks where the likelihood of occurrence and the consequences are significant 
• ensures adherence with statutory duties and
• assists in safeguarding Revenue Scotland’s information assets.

Revenue Scotland has a Senior Information Risk Owner (SIRO) and a number of Information Asset Owners (IAOs), who provide assurance to the SIRO that proper controls are in place. The SIRO role is to ensure information security policies and procedures are fit for purpose and are reviewed and implemented across all of Revenue Scotland’s business functions. 

In support of the SIRO, an Information Governance Group (IGG) has also been established whose role is to steer Revenue Scotland’s approach to information governance, review issues arising with regards to data protection, carry out horizon scanning in relation to new legislative and other developments relating to information governance and above all, to ensure that we comply with all of our mandatory legal obligations. 

The IAOs are tasked with ensuring compliance with statutory duties, knowing what information assets they ‘own’ and what information they handle, along with the relevant security requirements, sensitivity, importance and protocols for sharing of information assets. 

During the course of the year, there were two issues relating to minor data losses, which were reported and dealt with internally. The losses were resolved quickly and mitigations put in place. None of the losses met the threshold of being reportable to the Information Commissioner’s Office. There were no security incidents involving any physical losses such as paper files or laptops.

Parliamentary scrutiny 

As a Non-Ministerial Office, Revenue Scotland is accountable to the Scottish Parliament and, as such, can be called to appear before parliamentary committees to provide updates on operational matters, give evidence on tax related matters or provide written statements. 

During 2023-24 Revenue Scotland attended Parliament on three occasions providing evidence on: The Aggregates Tax and Devolved Taxes Administration (Scotland) Bill; the Scottish Government’s Public Services Reform Programme and Revenue Scotland’s performance during 2022-23. 

Revenue Scotland’s Corporate Plan, supporting legislation and this Annual Report are published documents. The Corporate Plan 2021-24, on which this document reports, was approved by Scottish Ministers and laid before the Scottish Parliament in November 2021 and this report will be laid before Parliament in October 2024. 

A new Corporate Plan covering was laid before the Scottish Parliament on the 28 March 2024 and will direct the organisation’s activities during the period 2024-27. 

Corporate plans, annual reports and accounts and minutes of Revenue Scotland Board meetings are available on our website. 

Internal Audit 

The Scottish Government’s Directorate for Internal Audit and Assurance (DIAA) provide Revenue Scotland’s internal audit service. DIAA produce an annual audit plan which is reviewed by the Audit and Risk Committee, who provide advice on the plan to the Board and the Accountable Officer. Regular updates on progress against the audit plan are presented by DIAA to the Audit and Risk Committee’s meetings. 

The Memorandum of Understanding between Revenue Scotland and DIAA was also reviewed during the year, reconfirming the basis for this service going forwards. 

During the year, DIAA completed audits on the following: 

• Knowledge Management within the Legal Team: This review looked at knowledge management within the Legal Services Team and how it can contribute to the quality of advice provided and/or the efficiency of the process. A ‘substantial’ assurance rating was awarded. The report noted a solid foundation for storing information together with a very strong culture and ‘tone from the top’ around knowledge management. It highlighted areas of good practice around availability of expertise and experience together with strong relationships with client teams, which all contribute to the quality of knowledge sharing already in place. The report concluded that the team is very well placed to build on what has been achieved already with the positive culture and quality of resource and support and noted the opportunity for other teams to consider the results of the review for application in their own areas and to help embed the enhancement opportunities across the organisation.
• Lease Review Returns: This review commenced during 2023-24 and was completed during early 2024-25. It examined the effectiveness of the series of actions taken to improve lease review return submissions and the outcomes achieved. A ‘Reasonable’ assurance rating was provided. The report: concluded that progress was being made and that a large amount of work and analysis had been undertaken to date; noted the complexity of the issues involved and recommended a more strategic approach should be adopted to achieve improvement in lease review return compliance and to support the case for change in areas required.
• Revenue Scotland’s approach to Assurance Mapping: This advisory review provided assurance on our approach to Assurance Mapping and the changes that had been made to the corporate assurance map. A ‘substantial’ assurance rating was awarded. The report concluded that the approach built on the positive culture around internal control and continuous improvement, using the assurance map as a tool to evidence management’s ongoing assurance conversations. It supported the approach that had been undertaken, which was seen to reflect good practice and followed recommended practise in identifying assurance provided across the four lines of defence helping ensure completeness of sources of assurance considered. 
• Approach to Hybrid Working: This review, deferred from 2022-23 to take into account other work in this area, considered Revenue Scotland’s approach to considering and adopting hybrid working. A ‘substantial’ assurance rating was awarded. The report supported the approach to the consideration and piloting of hybrid working. It also endorsed the proposed next steps in moving out of the pilot stage and into the adoption of hybrid working as the organisations operation model. The report stated that the approach taken, involving consideration of optimal operating model, gathering data on agreed evaluation criteria, employee feedback and consideration of wider trends to be good practice.

In addition, a follow up review was conducted in respect of the 2022-23 Review of Litigation Decisions. This review considered Revenue Scotland’s processes and governance around taking and responding to complex litigation decisions. 

The review was completed, noting that all recommendations had been fully implemented and good progress made to enhance overall governance over litigation decisions. 

The overall annual assurance opinion for the year was ‘Substantial Assurance’. This is the fourth year running that Revenue Scotland has received this rating and reflects the fact that DIAA continues to view Revenue Scotland’s risk, governance and control procedures as effective in supporting the delivery of its objectives and that any exposure to potential weakness is low and the materiality of any consequent risks negligible. 

DIAA reported that their work continues to obtain evidence of a strong culture and tone from the top regarding maintenance of robust control over key processes and embedding effective governance. They noted the focus on continuous improvement at all levels, helping to drive process improvement and efficiency, including improvements to enable taxpayers to comply with their obligations.

The report commented that Revenue Scotland is now well established in its role as the Tax Authority responsible for the collection and management of Scotland’s devolved taxes, commending the strong commitment to operational excellence and robust systems; which were clearly evidenced as part of stated strategic outcomes and priorities for further improvement and change beyond what is currently in place. 

External Audit 

External Audit is provided by Audit Scotland. The Audit Director is appointed under the Public Finance and Accountability (Scotland) Act 2000 to carry out the external audit of Revenue Scotland and the devolved taxes. During the year, the Audit and Risk Committee scrutinised Audit Scotland’s audit plan and received regular updates from them. The Independent Auditor’s Report can be found on page 17. As part of the 2022-23 audit undertaken by Audit Scotland, three matters were highlighted for attention, namely:

• the risk that the related party disclosure may be incomplete or inaccurate
• the risk that internal controls do not operate effectively, and 
• the risk key IT system and service providers may not have appropriate IT business continuity and disaster recovery plans. 

These matters were addressed by management and actions put in place to mitigate the risks. 

Audit Scotland has reviewed these during their audit of 2023-24 and reported its conclusions in its Annual Audit Report 2023-24.

Assessment of corporate governance 

Revenue Scotland has in place a system of internal controls and policies which are designed to safeguard its assets, data and ensure the reliability of financial records in relation to operational and tax duties. 

I continue to ensure that these controls are subject to review by management on a regular basis, and the new assurance mapping process, developed and implemented last financial year, has helped facilitate and enhance these regular reviews and alignment with Corporate Risks. 

Our internal controls also undergo formal review by both Internal and External Audit, whose reports are made available to the Audit and Risk Committee. Having assessed our corporate governance arrangements, I confirm that they comply with generally accepted best practice principles and relevant guidance. 

Risk management 

I have assessed our risk management arrangements and confirm that they are in accordance with the guidance set out in the Scottish Public Finance Manual. The year-end Certificates of Assurance include a dedicated section assessing the effectiveness of Revenue Scotland’s risk management approach over the year and no significant control matters were raised. This, alongside the assessment of risk throughout the year, contributes to my overall confidence assessment offered; further confirming that robust arrangements and practices were in operation throughout 2023-24.

Elaine Lorimer – Chief Executive and Accountable Officer of Revenue Scotland Accountability Report Corporate Governance Report Accountability Report 2023-24 24 September 2024

Annual Report and Accounts 2023-24 - Devolved Taxes Accounts

• Read more about Annual Report and Accounts 2023-24 - Devolved Taxes Accounts

Foreword

Welcome to the Revenue Scotland ‘Annual Report and Accounts for the Devolved Taxes for 2023-24’. 

Revenue Scotland is responsible for the collection and management of Scotland’s devolved taxes – currently Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT). Amounts received from the collection of the devolved taxes, less any permitted deductions, are paid into the Scottish Consolidated Fund in accordance with the Revenue Scotland and Tax Powers Act 2014 (RSTPA).

 Revenue Scotland was established by the RSTPA which also sets out the legislative framework for the wholly devolved taxes in Scotland. 

As a Non-Ministerial Office, Revenue Scotland is part of the Scottish Administration but is directly accountable to the Scottish Parliament to ensure the administration of tax is independent, fair and impartial. 

Revenue Scotland delegates some of its legislative functions for the collection of SLfT to the Scottish Environment Protection Agency (SEPA). This includes the regulatory functions of the Scottish Landfill Communities Fund (SLCF) – a tax credit scheme available to landfill operators. 

The Scottish Fiscal Commission is responsible for providing independent forecasts of tax revenues in line with the Fiscal Framework. Revenue Scotland provides statistical information about the taxes it collects. 

This document sets out the financial information about the devolved taxes required under the terms of the Accounts Direction issued by Scottish Ministers. 

A separate document, the Annual Report and Accounts for the Resource Accounts for 2023-24, provides detailed commentary on the performance of Revenue Scotland in delivering its statutory functions. 

This document includes Revenue Scotland’s corporate governance arrangements and reporting for the Devolved Taxes Account, audit and risk arrangements, the Independent Auditor’s report and the Financial Statements for the Devolved Taxes Account.

in earlier years. However, unless these adjustments were accrued into the financial statements of the relevant year, these are accounted for in the year of receipt.

The LBTT tax revenue raised in 2023-24 is dependent on the performance of both residential and non-residential property

markets within Scotland. The SLfT tax revenue raised in 2023-24 is dependent on categories and tonnage of waste deposited in landfill sites in Scotland.

Revenue Scotland is not responsible for the forecasting of expected tax revenues. The Scottish Fiscal Commission is responsible for providing independent forecasts of tax revenue and provided the forecast for the Budget (Scotland) Act 2023-24. 

Revenue Scotland is not responsible for the forecasting of expected tax revenues. The Scottish Fiscal Commission is responsible for providing independent forecasts of tax revenue and provided the forecast for the Budget (Scotland) Act 2023-24. 

The Budget (Scotland) Act 2023-24 estimates were included in Scotland’s Economic and Fiscal Forecasts published in December 2022.

Annual Report and Accounts 2023-24 - Resource Accounts

• Read more about Annual Report and Accounts 2023-24 - Resource Accounts

Statement from Chair

I am delighted to report another year of excellent progress at Revenue Scotland. You can see from the full Report now presented that we have collected revenues of over £855 million and kept our costs well below our benchmark of 1% of revenues, demonstrating a great commitment to effective cost controls and efficiency. In addition we have demonstrated through our Futures Project that we can move to a flexible and dynamic hybrid working model that will continue to support our relentless drive to deliver excellent value for money through our operating model. The commitment of our staff and leadership team to creating a great working environment is reaping dividends through excellent staff satisfaction scores, with the latest People Survey placing Revenue Scotland amongst the highest scoring organisations in the Civil Service, not just in Scotland, but UK wide. Our continued commitment to people development gives everyone at Revenue Scotland the opportunity to acquire new skills and improve existing ones, and this deepening of the quality results in better engagement, better compliance and a real commitment to raising standards across all aspects of the organisation. The results this year demonstrate the really positive trajectory we are maintaining.

We have now laid our plans for 2024-27 before Parliament which takes all of our commitments a stage further. Our four strategic outcomes underpin everything we do around Operational Excellence, Investing in our People, Working with Others and Expanding our Horizons. This approach undoubtedly aligns to the challenges laid out in Public Service Reform more widely and demonstrates our unwavering commitment to be the very best organisation we can be and I would recommend, if you have the opportunity, to have a look at our Corporate Plan which backs up the headlines with detailed actions. I also want to highlight how important it has been to engage more widely with Scottish Parliament as well as other stakeholders. I am really grateful to all MSPs and Committees who have engaged with Revenue Scotland over the last 12 months, we have benefitted greatly from all of the constructive conversations. We are committed to this continuing at pace, and to widening our collaboration with the key stakeholders. One great benefit is learning from others and we do this willingly and positively as we continue to enhance our approaches across a wide spectrum of activity.

As we look forward to playing our full part in the introduction of new Taxes, for example Scottish Aggregates Tax and the possibility of a Scottish Building Safety Levy, our ability to enhance our digital capabilities remains a high priority. The past year has seen further investment in improving our capabilities in this important area as we stand ready to implement our "Digital First" approach to these new as well as existing taxes and levies. Against a backdrop of a challenging environment both in Scotland and more widely our people have responded with enthusiasm, commitment and great agility. On behalf of the Board my heartfelt thanks to everyone in the team for delivering such a strong set of results. We can look forward with confidence to delivering on our Corporate Plan over the coming years and giving our stakeholders the continuous improvement that they expect for the benefit of Scotland.

Aidan O’Carroll 
Chair of the Board

Statement from the Chief Executive and Accountable Officer

This annual report and accounts covers the performance of Revenue Scotland for 2023- 24, set within the context of it also being the final year of our 2021-24 Corporate Plan. As I look back to 2021, the impact of the COVID-19 pandemic was still being felt. Considering how the operating model of Revenue Scotland has changed as a result, we are quite a different organisation now compared to then. We have moved from working from a fixed office base pre-pandemic to wholly remote working during the pandemic. Now, we are developing our own model of hybrid working. This model has the delivery of optimal performance by our staff, and therefore by our organisation as a whole, at its heart. In 2023-24, we completed our Futures Project, which has ensured the delivery of clarity as to our hybrid operating model for our staff, financial savings in a reduction of the office space we require in Victoria Quay, a new touchdown facility in partnership with Registers of Scotland, for use of space within their Glasgow office, providing office facilities for those staff who live closer to Glasgow than Edinburgh and ensuring our staff have access to technology which supports this new form of working. We continue to monitor our performance to ensure we remain open to further evolution of this way of working should it be required but as things currently stand, we are attracting talent into Revenue Scotland, in part because of the approach we have taken to hybrid working. Being an employer of choice remains one of our core objectives as we look ahead.

Taking a strategic approach to workforce planning has been key to continuing to build our capability as a tax authority and as a public body. This year, we prioritised digital and data, and project and programme leadership, while continuing to nurture and provide opportunities for development for all staff. As will be seen from the performance report, we have continued to deliver excellent performance against all of our KPIs. I am particularly pleased with the People Survey results this year, which once again rated us as high performing and in the top 25% of the 103 civil service organisations who participated. We scored particularly highly for how we lead and manage change, reflecting the conscious investment we made in the learning and development of our senior leaders and the wider culture we have sought to foster within our organisation. We are adding value to policy discussions on future taxes, bringing both our tax technical expertise to bear and also our knowledge of how to deliver programmes of change well. This is important in the context of Scottish Aggregates Tax where a multi-disciplinary team from Revenue Scotland is working in partnership with the Scottish Government to deliver the next wholly devolved tax to Scotland. We are also starting our preparatory work for a Scottish Building Safety Levy and expanding our reach and reputation for the expertise we have in tax and as a high-performing public body into other discussions too, with central government and more widely across other public bodies and into new sectors such as local government.

Our work on Equalities and Diversity is another area where we have made real progress, with the finalisation of our mainstreaming report and creation of a steering group to take a more strategic view of the work we are doing across our functions to embed Equality, Diversity, and Inclusion (EDI) principles and practices into our organisational culture and everything we do. As we look ahead to our new Corporate Plan for 2024-27 which is set within the context of a challenging financial climate, we stand ready as an energetic, digitally enabled, efficient public body to engage in the reform and delivery of public services in Scotland. The model we have adopted has much to offer in how public services can be delivered working collaboratively with an ethos that has public service at its heart.

Elaine Lorimer 
Chief Executive

Opportunity to become a co-opted member of the Revenue Scotland’s Audit and Risk Committee and Staffing and Equalities Committee

Image

Dear Applicant,

Are you looking to learn how a public body operates and have ambitions to become a future non-executive Board member? Do you have relevant experience to contribute to discussions and decision making which will assist in its ongoing development and success?

• Read more about Opportunity to become a co-opted member of the Revenue Scotland’s Audit and Risk Committee and Staffing and Equalities Committee

Quarterly SLfT Statistics

• Read more about Quarterly SLfT Statistics

Commentary

£15.5 million in Scottish Landfill Tax (SLfT) was declared payable for the latest quarter, April to June 2024 (Q1, 2024/25). The total tonnage of standard taxable waste was 152,700 in the latest quarter.

The total SLfT declared due in Q1 of 2024/25 is the lowest of any Q1, but higher than the two previous quarters (Q3 and Q4 of 2023/24). It was 29% higher than last quarter.

The tonnes of standard taxable waste reported this quarter were the lowest of any Q1 but higher than the two previous quarters (Q3 and Q4 of 2023/24). It was 26% higher than the all time low which was recorded in the last quarter.

The total tonnes of lower rate waste this quarter is the lowest ever recorded, and 26% lower than last quarter.

24 operators provided returns for the latest quarter, covering 42 sites. Note that some sites may submit a nil return some quarters. Operators are liable to submit a return until they are de-registered.

Image

Image

Note - to make the information in this publication more accessible to users, charts and additional commentary have been added, as well as some formatting changes (for example, to support the use of assistive technology such as screen reader software). If you have any comments regarding these changes or the overall publication, please contact us at: statistics@revenue.scot 

Aidan O’Carroll, Chair, reappointed to the Revenue Scotland Board

• Read more about Aidan O’Carroll, Chair, reappointed to the Revenue Scotland Board

Designation of the Forth Green Freeport tax sites

• Read more about Designation of the Forth Green Freeport tax sites