Scottish Government consolidated accounts: 2018-2019

Annual report of consolidated financial results of the Scottish Government, its Executive Agencies and the Crown Office, prepared in accordance with IFRS.

18. Contingent Assets/Liabilities disclosed under IAS 37

18a. Contingent Assets disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a contingent Asset under IAS 37: Provisions, Contingent Liabilities and Contingent Assets is 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.

NHS Employer's Liability estimated at £2.1m (2017-18: £1.6m).

Grants repayable as a result of sales of Housing Association Properties to tenants or as a result of conditions of grant being breached. Grants become repayable when conditions of grant cease to be met. It is not possible to predict the level of activity in future years.

Repayments of grant from the Open Market Shared Equity Scheme which allows people on low income to buy a share in a property, the balance being owned by a housing association and funded by grant from the Scottish Government. If the property is sold or an increased share is purchased by the owner, the grant becomes repayable. It is not possible to estimate the level of future receipts.

Grants repayable from Edinburgh Council Rent Guarantee - Project Resonance. Grant becomes repayable if either (a) projects do not proceed as planned, where it is repayable immediately, or, (b) projects are sold on privately up to 10 years from now. Timing is uncertain as to when events giving rise to the contingent asset are likely to occur.

18b. Contingent Liabilities disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a contingent Liability under IAS 37: Provisions, Contingent Liabilities and Contingent Assets is:

  • a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control; or
  • a possible obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or
  • the amount of the obligation cannot be measured with sufficient reliability.

Only contingent liabilities above the threshold of £1m, which have to be reported and authorised by the Scottish Parliament in accordance with the written agreement between the Finance Committee and the Scottish Government, are included in the consolidated annual accounts.

Housing related

A liability of up to £34.6m (2017-18: £47.2m) following the Glasgow Stock Transfer could arise if HMRC were to successfully challenge the terms of the original VAT agreement that was entered into in 2004 by Glasgow Housing Association and Glasgow City Council.

The Mortgage Indemnity New Home Scheme (MI New Home) allows credit-worthy borrowers, locked out of the market by high deposit requirements, access to 90% to 95% LTV mortgages. The scheme is supported by a SG guarantee which sits behind cash indemnities set aside by participating house builders (for each house sold under the scheme). The guarantee valued at £7.15m (2017-18: £7.19m) can only be called upon once the indemnities are exhausted and lasts for 7 years.

National Housing Trust guarantees of £3.5m (2017-18: £3.5m) which the Scottish Government are committed to giving but are not active until construction has been completed.

As part of the Winchburgh Housing Development there is a potential liability in relation to loan repayments for the construction of Winchburgh Primary School. The housing development is due to pay the council as houses are sold. SG have entered into an arrangement to cover final costs if the developer cannot pay which can be called upon after 31 March 2026. Current value of potential liability is £15m (2017-18: £nil).

Sports events

If the 2019 Solheim Cup were to be cancelled a payment of £5.6m (2017-18: £5.6m) would be due to the European Ladies Tour.

NHS Related

Clinical and Medical compensation payments of £517.0m (2017-18: £367.0m).

NHS Employer's Liability estimated at £4.3m (2017-18: £3.3m).

Justice related

Claims against former independent Conveyancing and Executory Practitioners in Scotland. This is a contingent liability relating to an agreement to meet any valid claims arising from the acts or omissions of past independent conveyancing and executory practitioners, as defined by the Law Reform (Miscellaneous Provisions) Scotland Act 1990.

Claims alleging that a Tribunal member received less favourable treatment contrary to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 because he did not receive a pension in relation to his part-time fee-paid appointment.

In July 2017 the Supreme Court handed down judgement in a case where they found that it was unlawful to restrict the survivor's pension payable to a surviving civil partner or same sex spouse so that it reflects only the member's pensionable service since 5 December 2005 which is the date the Civil Partnership Act 2004 came into force. The exact implications of this ruling are still unclear so a contingent liability exists with the Scottish Fire and Rescue Service Accounts for any potential cost implications.

An appeal for a pensions claim under the Part-time Workers (Prevention of less Favourable Treatment) Regulations 2000. The question was whether the Appellant was entitled to a pension for his service before the date for transposition of the Part-Time Workers Directive 7 April 2000, as well as for his service after that date, despite the fact that it was lawful to discriminate against a part-time worker in that earlier period. The Supreme Court will sit again in July 2019 and determine the outcome.

Rural related

The Supreme Court found that an element of the Agricultural Holdings Act 2003 breached the European Convention of Human Rights - Art 1 P1. Remedial legislation was enacted to resolve this and a small group of tenant farmers have taken SG to Court of Session seeking compensation for breach of their rights arising from the Remedial legislation. The court has issued initial judgement but litigation is still live and more court activity is required to resolve.

EU CAP audits can result in future disallowances and a number of audits are in progress relating to CAP for scheme years 2015, 2016, 2017 and 2018. The level of late payment penalties from the EC to the UK member state and the split of penalties attributed to administrations are still to be formally concluded for CAP Pillar 1 scheme year 2015.


As part of Transport Scotland's normal course of business the Forestry Commission granted the right to use a forestry track as an emergency diversion route on the A83 Rest And Be Thankful on the understanding that Transport Scotland will have liability for any incidents that may occur whilst the track is being used for this purpose. The potential obligation is estimated at £5m (2017-18: £5m) but it is not considered likely that any liability will occur.

A judicial review was launched in 2019 in relation to a decision of the Scottish Government not to accept claim for payment of grant expenditure of £9m due to not meeting a number of grant conditions.

An estimated £25m in claims was paid out to a number of organisations and classed as ineligible expenditure for European Structural Funds (ESF). The Scottish Government is reviewing those claims and working to reintroduce them as eligible in line with the audit recommendations made by the European Commission (EC).



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