Visitor Levy Act queries: FOI release

Information requested

Please provide the specific reason used by the Scottish Government to decide that the visitor levy would be treated as part of the accommodation provider’s turnover.

Please provide the specific reason provided to HMRC by the Scottish Government for treating the visitor levy as part of the accommodation provider’s turnover.

Given that the average range of VAT for accommodation in Europe is 5-10%, and that the VAT rate for accommodation in Scotland is 20%, please provide the specific reason used by the Scottish Government to decide that the visitor levy should be subject to VAT.

Response

1. Before addressing the specific details of your FOI request, I would first like to outline some general points for context.

2. The principles and application of VAT, which are central to your request, pertain to reserved matters. The inclusion of the collection of the Visitor Levy, in the assessment of an accommodation provider’s VAT taxable turnover, is not the result of a decision to apply VAT to the Visitor Levy. Rather, this is simply how existing VAT law, set by the United Kingdom Government, applies to such charges.

3. Generally, VAT is charged on the price paid on the supply of taxable goods or services, including other taxes, levies and charges. In the case of the Visitor Levy, if an accommodation provider includes an amount equivalent to a Visitor Levy in the charge for the overnight accommodation, then this will form part of what is paid under a contract for the supply of accommodation. This portion will therefore have a VAT liability, as part of the accommodation.

4. To illustrate the turnover point, if the cost of accommodation was £100 and the Visitor Levy was 3% (£3), then the VAT due on this transaction would be calculated on the total amount of £103. This is based on existing UK VAT legislation. This is similar to the manner in which duties on alcohol and fuel attract VAT.As such, any levies collected by an accommodation provider would be included in the assessment of their VAT taxable turnover, for VAT registration purposes.

5. Therefore, the application of reserved VAT law did not involve a “decision” by Scottish Ministers to apply or include VAT; nor did the Scottish government give a “reason” or argument to HMRC that reserved VAT law should apply. As such, the terms stated in your FOI request include assumptions about reserved policy which are not within the competence of the Scottish Government. For this reason, I am unable to provide you with the information you have requested in relation to decisions about treatment, because the Scottish Government does not hold the information under the terms of your request. Therefore, we are unable to comply with your request under section 17(1) of FOISA.

6. While our aim is to provide information whenever possible, in this instance we are unable to provide some of the information you have requested, because exemptions under FOISA applies to that information.

7. In your request, you asked for reasons provided by the Scottish Government to HMRC. However it was in fact the Scottish Government that sought advice from HMRC. Although the terms of your request do not include a request for this information, for clarity I must inform you that such advice would be exempt as Legal advice is exempt under section 36(1) of FOISA. Furthermore, as VAT is a reserved policy area and is a matter for the UK Government, advice may be shared in confidence between the UK Government and the Scottish Government. For the purposes of FOISA, where the information is received in confidence from a department of the UK Government it is not considered to be held by the Scottish Government. This is set out within section 3(2)(a)(ii) of FOISA. As such we are unable to provide this information because the Scottish Government does not hold that information. You may wish to submit a new request under the Freedom of Information Act 2000 (FOIA) to The Financial Secretary to the Treasury, Lord Livermore at contactholmember@parliament.uk who should be able to help you further.

8. For your interest, I am able to signpost you to some of the information which relates to the terms of your request. The Scottish Government has previously responded to questions from parliamentary committee on the application of VAT to the visitor levy, you can find a copy of that correspondence on the Scottish Parliament website (https://www.parliament.scot/-/media/files/committees/localgov/ correspondence/2023/visitorlevybill1september.pdf).

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