Scottish Aggregates Tax: Options for approaching cross-border taxation – Consultation Analysis

2. Executive Summary

2.1 The key themes emerging from the consultation responses and pre-consultation stakeholder engagement are summarised below:

Cross-border movement of aggregate

• SAT should be applied as far up the supply chain as possible, with aggregate producers accounting for the tax.
• Administrative burden must be minimised to ensure proposals are workable for businesses.
• Approaches should seek to avoid double taxation and market distortion.
• Alignment between SAT and AGL processes is needed to support taxpayer understanding and simplicity.

Direct supply - collection scenario

• Respondents largely viewed the option of a tick box on sales tickets to indicate the destination of materials as a practical and proportionate solution.
• This approach could be supported by digital tools and records, standardisation and guidance.
• While adding some administrative burden for quarry operators, the proposed approach was seen as proportionate and ensures that quarry operators account for the tax rather than customers.
• Registration at company level and consolidated returns would limit administration for multi-site operators.

Indirect supply – middlemen, producer-based delivery

• This approach minimises administrative complexity by keeping the tax point with quarry operators. Furthermore, this mirrors how AGL is currently managed thereby ensuring continuity, limits disruption, and avoids confusion in multi-link supply chains.
• The use of existing delivery data will ensure the accuracy of this approach.
• Some concerns were raised about confirming final delivery locations, an increased administrative burden on quarry operators and a risk of tax avoidance should the AGL and SAT rates diverge.
• Respondents suggested that clear guidance and standardised documentation will be required to make this approach work.

Indirect supply – middlemen, over-the-counter sales

Option 1- Over-the-counter sales from middlemen are exempt

• Whilst there is a risk of tax avoidance through misclassification or artificial supply chains, this option was seen as easier to administer, with avoidance risks largely limited to sites close to the border between Scotland and the rest of the UK (“rUK”).
• Due to the complexity of middleman transactions, often involving numerous persons and delivery locations, and the perceived small scale of these types of transactions, an exemption was considered proportionate to ensure simplicity and avoid double taxation.

Option 2 – middlemen declaration & quarry operator registers for SAT for producer-based delivery

• Respondents suggested this option would be too burdensome for quarry operators; and may risk commercial disruption and non-compliance due to complexity, unclear responsibilities, practicality, and the potential for error.
• Stakeholders noted that declarations could create an administrative overhead for both aggregates suppliers and middlemen. Engagement has indicated that a declaration would need to be for a significant period, such as an annual declaration, as it would otherwise be overly burdensome.

Other complex scenarios

• Feedback identified additional cross-border scenarios requiring further consideration to avoid double taxation or tax avoidance, including:
• Cross-border processing or blending of aggregates.
• Cross-border stockpiling or temporary storage.
• Cross-border public infrastructure projects.
• Hire or reuse of aggregate materials.
• Scenarios where aggregate may move back and forth across the border between Scotland and rUK.

Impact assessments

2.2 A small sub-set of respondents commented on the impact assessments considered in relation to the options for approaching cross-border taxation:

• SAT policy could affect equal opportunities, human rights, and child wellbeing if it raises the costs of aggregates or creates barriers for infrastructure projects - particularly in rural, island, or economically vulnerable areas.
• Smaller businesses and local councils could face financial strain, while consumers could see higher prices if aggregate prices were to increase.
• Cross-border policy must be fair, simple, proportionate for business and complementary with AGL to ensure clarity and consistency.

Next Steps

2.3 The views gathered will inform the development of SAT policy in advance of the proposed introduction date of 1 April 2026.

2.4 The Scottish Government has carefully considered all consultation responses, which will inform final decisions on SAT cross-border legislation to be introduced to the Scottish Parliament. Further information on the Scottish Government’s response to this consultation is set out in Chapter 5.

2.5 The secondary legislation will be considered by the Scottish Parliament in accordance with its established process for examining draft legislation. Further details are available on the Scottish Parliament website^[2].